UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
X EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
____ EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 0-3108
TRION, INC.
(Exact name of registrant as specified in its charter)
Pennsylvania 25-0922753
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
P. O. Box 760, 101 McNeill Road, Sanford, North Carolina 27331-0760
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 919/775-2201
Not applicable
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of
August 1, 1995.
6,424,183 shares of Common Stock, par value $.50.<PAGE>
<PAGE>
<TABLE>
Part I
Item 1. Financial Statements
TRION, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share amounts)
<CAPTION>
Six Months Ended Three Months Ended
June 30 June 30
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Net sales. . . . . . . . . . . . $17,303 $15,555 $8,799 $7,637
Other income . . . . . . . . . . 124 56 85 28
17,427 15,611 8,884 7,665
Cost and expenses:
Cost of products sold. . . . . 10,889 9,693 5,404 4,560
Selling, administrative
and engineering . . . . . . . 4,822 4,483 2,474 2,211
Interest . . . . . . . . . . . 98 77 50 41
15,809 14,253 7,928 6,812
Income before income taxes . . . 1,618 1,358 956 853
Income tax . . . . . . . . . . . 599 495 367 361
Net income for the period. . . . $ 1,019 $ 863 $ 589 $ 492
Net income per common share. . . $ .16 $ .14 $ .09 $ .08
Dividends declared . . . . . . . $ .04 None $ .02 None
<FN>
See notes to consolidated condensed financial statements.
</TABLE>
<PAGE>
<TABLE>
TRION, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands, except share amounts)
<CAPTION>
ASSETS
June 30 December 31
1995* 1994
<S> <C> <C>
Current assets:
Cash and cash equivalents. . . . . . . $ 3,954 $ 4,149
Trade accounts receivable, less
allowance for doubtful accounts
(1995 and 1994 - $175,000). . . . . 8,269 6,914
Inventories. . . . . . . . . . . . . . 5,595 5,590
Prepaid expenses and other current assets 1,502 1,335
Total current assets. . . . . . . . 19,320 17,988
Property, plant and equipment:
Land . . . . . . . . . . . . . . . . . 78 78
Buildings. . . . . . . . . . . . . . . 5,058 5,058
Machinery and equipment. . . . . . . . 10,933 10,456
Allowance for depreciation . . . . . . (10,145) (9,801)
5,924 5,791
$25,244 $23,779
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C>
Current liabilities:
Accounts payable and accruals. . . . . $ 3,751 $ 3,244
Current portion of long-term debt. . . 360 360
Total current liabilities . . . . . . 4,111 3,604
Long-term debt . . . . . . . . . . . . . 2,840 2,840
Accrued management restructuring expenses 219 307
Deferred income taxes. . . . . . . . . . 278 232
7,448 6,983
Shareholders' equity:
Common stock, par value $.50 a share:
Authorized 20,000,000 shares
Issued and outstanding: 1995 - 6,424,183
and 1994 - 6,399,183 . . . . . . . . . 3,212 3,200
Additional paid-in capital . . . . . . . 1,421 1,327
Retained earnings. . . . . . . . . . . . 12,965 12,202
Foreign currency translation adjustment
- unrealized 198 67
17,796 16,796
$25,244 $23,779
<FN>
See notes to consolidated condensed financial statements.
*Unaudited
</TABLE>
<PAGE>
<TABLE>
TRION, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<CAPTION>
Six Months Ended June 30
1995 1994
<S> <C> <C>
OPERATING ACTIVITIES
Net income . . . . . . . . . . . . . . . . $ 1,019 $ 863
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization. . . . . . 510 483
Deferred income taxes. . . . . . . . . . 118 11
Changes in operating assets and liabilities:
Accounts receivable . . . . . . . . . (1,318) 413
Inventory and prepaid expenses. . . . (283) 745
Accounts payable and accrued expenses 337 (712)
Gain on disposal of equipment. . . . . . (18) (6)
Foreign currency transaction loss. . . . (25) 104
Net cash provided by operating activities 340 1,901
INVESTING ACTIVITIES
Purchase of property, plant and equipment (639) (301)
Proceeds from disposal of equipment. . . . 21 9
Net cash used by investing activities. . (618) (292)
FINANCING ACTIVITIES
Exercise of stock options. . . . . . . . . 106 179
Cash dividends paid. . . . . . . . . . . . (128) 0
Net cash provided by investing activities (22) 179
Effect of exchange rate changes on cash. . 105 58
Increase in cash and cash equivalents. . . (195) 1,846
Cash and cash equivalents at beginning
of period. . . . . . . . . . . . . . . . 4,149 2,139
Cash and cash equivalents at end of period $ 3,954 $3,985
<FN>
See notes to consolidated condensed financial statements.<PAGE>
TRION, INC. AND SUBSIDIARIES
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
June 30, 1995
Note A - Basis of presentation
The accompanying unaudited consolidated condensed financial statements have been
prepared in accordance with the instructions to Form 10-Q and therefore do not
include all information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments (consisting only of normal recurring accruals) considered necessary
for a fair presentation have been reflected in the reported financial
information. For further information, refer to the consolidated financial
statements and footnotes included in the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1994.
Note B - Net Income per Share of Common Stock
Net income per share of common stock is computed by dividing net income by the
average number of shares of common stock outstanding during the periods. The
average number of common shares outstanding for the six-month period ended June
30 was 6,418,198 in 1995 and 6,367,584 in 1994, and 6,424,183 and 6,382,176 for
the three-month periods ended June 30, 1995 and 1994; respectively. Outstanding
stock options are not considered in computing earnings per share as the effect
would not be material.
Note C - Inventories
The Registrant does not maintain an integrated dollar perpetual inventory
system. During the interim periods, inventories are charged with actual costs
incurred and relieved at product standard costs. Such standards are updated at
least annually. Based upon the components of inventory at the preceding
physical inventory date and charges to and relief of inventories during the
interim period, the components of inventory are estimated as follows
(in thousands):
June 30 December 31
1995 1994
Raw materials $ 2,600 $ 2,147
Work-in-process and
finished goods 2,995 3,443
$ 5,595 $ 5,590
Cost of domestic raw materials inventory is determined by the last-in, first-out
method. No provision has been made during the interim period to reflect changes
in last-in, first-out values since the preceding December 31. Management
believes that such provision, if any, would not be significant.
<PAGE>
Note D - Subsequent Events
On August 1, 1995 the Registrant acquired all of the outstanding common stock of
Envirco Corporation, a manufacturer and distributor of ultra-clean air systems
and components located in Albuquerque, New Mexico for aggregate cash
consideration of approximately $8 million. The Registrant expects to incur
costs of approximately $0.5 million; consisting principally of a finders fee,
accounting and legal expenses.
In a related transaction, the Registrant and/or Envirco Corporation entered into
employment agreements and/or non-compete agreements with five key employees of
the Envirco Corporation. These agreements have terms which vary from two to five
years, maintain salary levels previously in effect, and, in certain
circumstances based upon company performance, provide incentive payments and
options to purchase the Registrant's stock at values no less than fair market
value.
In connection with the acquisition, the Registrant also obtained a credit
facility for $18 million from Wachovia Bank of North Carolina; a portion of
which was used for this transaction. The structure of the facility includes an
$8 million 36 month revolving line of credit and a $10 million 60 month
declining balance term loan; both having an interest rate at the London
Interbank Offering Rate plus 1.3%. This facility replaces the $3 million line
of credit previously in place.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Material Changes in Results of Operations
Net sales for the quarter ended June 30, 1995 were $8,799,000 as compared to
$7,637,000 a year ago, a 15% increase in 1995 over 1994. This improvement was
due to an increase in North American Operations shipments of consumer and
engineered products, 9% and 33%, respectively. Net sales for the six months
ended June 30, 1995 increased 18% over the prior year, from $15,555,000 in 1994
to $17,303,000 in 1995. During the six month period North America consumer
products increased by 15% and engineered product shipments increased 11% as
compared to the prior year period. European operations were relatively stable
in both comparative periods.
Net income for the second quarter ended June 30, 1995 was $589,000 as compared
to $492,000, a 20% increase over the same period a year ago, due to the increase
in net sales, improved operating expenses as a percentage of net sales and
improved performance in other income. These same reasons generated $1,019,000 in
net income for the latest six month period, or an 18% increase over the $863,000
posted in 1994 period.
Backlog for the Company's unshipped orders increased 18% at June 30, 1995 to
$4,209,000 as compared to $3,582,000 at June 30, 1994. Year to date, order
bookings in 1995 for engineered products have exceeded shipment levels as well
as 1994 year to date levels. Consumer product year to date orders in 1995 were
above 1994 year to date order levels however, they did not exceed 1995 shipment
volumes. This shift in product composition was anticipated by management.
As a percentage of net sales, the Company experienced an increase in the cost of
products sold during the quarter ended June 30th, 61.4% in 1995 as compared to
59.7% in 1994, due to raw material cost increases offset by favorable product
mix. For the six months ended June 30, 1995 and 1994, cost of products sold as
a percentage of net sales were 62.9% and 62.3%, respectively.
Selling, administrative and engineering expenses during the second quarter
increased by $263,000 to $2,474,000 in 1995 as compared to $2,211,000 in 1994
and reflected the Company's investment in selling, marketing and engineering
efforts. As a percentage of net sales, these expenses were 28.1% in 1995 and
29.0% in 1994. Additionally, the Company realized savings of approximately
$118,000 during the comparative quarters due to the successful consolidation of
their European operations. Selling, administrative and engineering expenses for
the six months ended June 30, 1995 increased by $339,000 to $4,822,000 as
compared to $4,483,000 in 1994 and, as a percentage of net sales, were 27.9% in
1995 and 28.8% in 1994. Overall, the Company monitors costs and expenses closely
and has continued to focus on cost reduction programs.
Income from operations on a total basis as reported in the accompanying segment
data, resulted in a 11.5% improvement in the six months ended June 30 and a
12.7% increase in the three month comparative period. These improvements are
principally attributable to the increase in sales volumes in all areas offset by
the aforementioned increases in cost of products sold. In addition, the
European operations segment realized further benefit from the consolidation
actions.
<PAGE>
Interest expense has increased in both the second quarter and year to date
comparative periods due to the corresponding rise in interest rates in 1995 as
compared to 1994.
Income taxes for the second quarter ended June 30, 1995 were $368,000 and as a
percent of income before income taxes were 38%. In the comparable period in
1994, income taxes were $361,000 and as a percent of income before income taxes
were 42%. The primary reason for the reduction was the inability to utilize
foreign tax loss carryforwards in the 1994 period. Income taxes for the six
month period ended June 30, 1995 and 1994 were $599,000 and $495,000,
respectively. As a percent of income before income taxes, there was a slight
rise for the six month period resulting in 37% in 1995 as compared to 36% in
1994.
The net income per common share increased to $0.09 during the second quarter in
1995 from $0.08 for the second quarter of 1994. The six months ended June 30,
1995 and 1994 generated $0.16 and $0.14 net income per common share,
respectively.
Material Changes in Financial Condition
The financial condition of the Company remains strong with the current ratio at
4.7:1, working capital increasing to $15,209,000, shareholders' equity rising to
$17,796,000 and a long-term debt declining to 16% of equity.
Subsequent Event
On August 1, 1995 the Company acquired all of the outstanding common stock of
Envirco Corporation, a manufacturer and distributor of ultra-clean air systems
and components located in New Mexico for cash consideration of approximately
$8 million.
In connection with this acquisition, the Company also obtained a credit facility
for $18 million from Wachovia Bank of North Carolina; a portion of which was
used for this transaction.
Although the Company has not yet finalized the financial impact this
acquisition will have on its results of operations and financial condition, it
is expected to materially impact the results of operations and financial
condition of the Company.
<TABLE>
SEGMENT DATA
(Unaudited)
(In thousands)
Six Months Ended Three Months Ended
June 30 June 30
1995 1994* 1995 1994*
<S> <C> <C> <C> <C>
Net sales to unaffiliated customers:
North American Operations:
Engineered Products . . . . . $ 5,218 $ 4,664 $ 3,165 $ 2,380
Consumer Products . . . . . . 9,164 8,175 4,202 4,060
European Operations. . . . . . 2,921 2,716 1,432 1,197
$17,303 $15,555 $ 8,799 $ 7,637
Income (loss) from operations:
North American Operations:
Engineered Products . . . . . $ 1,065 $ 965 $ 751 $ 530
Consumer Products . . . . . . 1,554 1,522 686 990
European Operations. . . . . . (120) (245) (72) (245)
2,499 2,242 1,365 1,299
General Corporate:
Other income . . . . . . . . . 124 56 85 28
Interest (U.S.). . . . . . . . (98) (77) (50) (41)
Other expense. . . . . . . . . (907) (863) (444) (433)
(881) (884) (409) (446)
Income before income taxes . . . $ 1,618 $ 1,358 $ 956 $ 853
<FN>
* Certain amounts in 1994 have been reclassified to conform to 1995
classifications.
</TABLE>
<PAGE>
PART II
Item 5. Other Information
As described in footnote D to the unaudited financial statements included in
Part I hereof, which is hereby incorporated by reference, the Registrant
acquired all of the outstanding common stock of Envirco Corporation, a New
Mexico corporation privately owned by a group of 13 investors, including
Envirco Corporation management. The Registrant engaged an independent
investment banker to identify and assist in the fair valuation of the subject
company and intends to continue the same use of the assets of the acquired
company. A copy of the Stock Purchase Agreement is included as Exhibit 2.1
hereto. Pursuant to Item 7 of Form 8-K and Rule 3-05(b)(2)(i) of Regulation
S-X, the Registrant will provide the required financial information by
ammendment to this Form 10-Q within 60 days after this acquisition is required
to be reported.
Item 6(a). Exhibits
2.1 Stock purchase agreement for the sale of the capital stock of
Envirco Corporation dated July 28, 1995.
99.1 News release announcing acquisition of Envirco Corporation.
Item 6(b). Report on Form 8-K
There were no reports on Form 8-K filed by the Registrant during the period
covered by this report.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TRION, INC.
(Registrant)
Date: August 11, 1995 /s/Steven L. Schneider
President and Chief Executive Officer
Date: August 11, 1995 /s/Calvin J. Monsma
Vice President and Chief Financial
Officer
_____________________________________________
EXHBIT 2.1
STOCK PURCHASE AGREEMENT
FOR THE SALE OF THE CAPITAL STOCK OF
ENVIRCO CORPORATION
AMONG
TRION, INC.,
ENVIRCO CORPORATION
ALLIED INVESTMENT CORPORATION
ALLIED INVESTMENT CORPORATION II
RICHARD V. DEMPSTER
JOHN I. LEAHY
WILLIAM J. LEADER
AND
THE CURRENT STOCKHOLDERS OF ENVIRCO CORPORATION
DATED AS OF JULY 28, 1995
_____________________________________________
<PAGE>
TABLE OF CONTENTS
PAGE
I. PURCHASE AND SALE OF STOCK . . . . . . . . . . . . . . . . 2
1.1 Sale of Shares. . . . . . . . . . . . . . . . . . . 2
1.2 Purchase Price and Payment; Employment Agreements and
Covenants Not to Compete; Escrow Agreement; Deposit of
Existing Shares . . . . . . . . . . . . . . . . . . 2
1.3 Purchase Price Adjustment at Closing. . . . . . . . 3
1.4 Post-Closing Adjustment.. . . . . . . . . . . . . . 4
II. CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . 5
III. DELIVERIES AT THE CLOSING. . . . . . . . . . . . . . . . 5
3.1 Deliveries by the Stockholders. . . . . . . . . . . 5
3.2 Deliveries by Trion.. . . . . . . . . . . . . . . . 7
IV. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS . . . 8
4.1 Ownership of Shares.. . . . . . . . . . . . . . . . 8
4.2 Organization and Good Standing; Books and Records;
Directors and Officers. . . . . . . . . . . . . . . 9
4.3 Authorization.. . . . . . . . . . . . . . . . . . . 10
4.4 Consents and Approvals. . . . . . . . . . . . . . . 10
4.5 Litigation. . . . . . . . . . . . . . . . . . . . . 11
4.6 Contracts and Other Agreements. . . . . . . . . . . 11
4.7 Customers and Suppliers.. . . . . . . . . . . . . . 12
4.8 Title to Properties; Absence of Liens and
Encumbrances. . . . . . . . . . . . . . . . . . . . 12
4.9 Bank Accounts.. . . . . . . . . . . . . . . . . . . 13
4.10 Patents, Trademarks and Trade Names.. . . . . . . . 13
4.11 Employee Benefit Plans; ERISA.. . . . . . . . . . . 13
4.12 Tax Matters.. . . . . . . . . . . . . . . . . . . . 16
4.13 Insurance.. . . . . . . . . . . . . . . . . . . . . 18
4.14 Brokers.. . . . . . . . . . . . . . . . . . . . . . 19
4.15 Financial Statements. . . . . . . . . . . . . . . . 19
4.16 Title to Real Estate: Leases. . . . . . . . . . . . 19
4.17 No Undisclosed Liabilities. . . . . . . . . . . . . 20
4.18 Insider Interests.. . . . . . . . . . . . . . . . . 21
4.19 Absence of Questionable Payments. . . . . . . . . . 21
4.20 Absence of Certain Changes. . . . . . . . . . . . . 21
4.21 Compliance with Laws. . . . . . . . . . . . . . . . 24
4.22 Receivables and Inventory.. . . . . . . . . . . . . 24
4.23 Personnel.. . . . . . . . . . . . . . . . . . . . . 25
4.24 Labor Relations.. . . . . . . . . . . . . . . . . . 25
4.25 Environmental Matters.. . . . . . . . . . . . . . . 25
4.26 Assets Necessary to Business; Licenses and Permits. 27
4.27 Affiliate Agreements; Potential Conflicts of Interest.
27
4.28 Subsidiaries and Investments. . . . . . . . . . . . 28
4.29 Company Products. . . . . . . . . . . . . . . . . . 28
4.30 Disclosure. . . . . . . . . . . . . . . . . . . . . 29
V. REPRESENTATIONS AND WARRANTIES OF TRION. . . . . . . . . . 29
5.1 Organization and Good Standing. . . . . . . . . . . 29
5.2 Authorization.. . . . . . . . . . . . . . . . . . . 29
5.3 Consents and Approvals. . . . . . . . . . . . . . . 30
5.4 Securities Law Representations. . . . . . . . . . . 30
VI. COVENANTS OF THE PARTIES. . . . . . . . . . . . . . . . . 31
6.1 Conduct of Business.. . . . . . . . . . . . . . . . 31
6.2 Assurances; Best Efforts. . . . . . . . . . . . . . 31
6.3 Other Obligations of the Stockholders Pending the
Closing.. . . . . . . . . . . . . . . . . . . . . . 31
6.4 Certain Tax Matters.. . . . . . . . . . . . . . . . 33
6.5 Public Announcements. . . . . . . . . . . . . . . . 34
6.6 Expenses. . . . . . . . . . . . . . . . . . . . . . 34
6.7 Indemnification of Brokerage. . . . . . . . . . . . 34
6.8 Environmental Audit.. . . . . . . . . . . . . . . . 34
6.9 Medical Benefits. . . . . . . . . . . . . . . . . . 35
VII. CONDITIONS TO OBLIGATIONS OF TRION . . . . . . . . . . . 35
7.1 Representations and Warranties. . . . . . . . . . . 35
7.2 Performance.. . . . . . . . . . . . . . . . . . . . 35
7.3 Stockholders' Certificate.. . . . . . . . . . . . . 35
7.4 Opinion of Counsel to the Stockholders. . . . . . . 35
7.5 Documents.. . . . . . . . . . . . . . . . . . . . . 35
7.6 Third Party Consents. . . . . . . . . . . . . . . . 35
7.7 No Injunction.. . . . . . . . . . . . . . . . . . . 36
7.8 No Government Proceeding or Litigation. . . . . . . 36
7.9 No Material Adverse Change. . . . . . . . . . . . . 36
7.10 FIRPTA Certificate. . . . . . . . . . . . . . . . . 36
7.11 Resignations. . . . . . . . . . . . . . . . . . . . 36
7.12 Releases. . . . . . . . . . . . . . . . . . . . . . 36
7.13 Termination of Agreements.. . . . . . . . . . . . . 36
7.14 Board of Director's Approval. . . . . . . . . . . . 36
7.15 Financing.. . . . . . . . . . . . . . . . . . . . . 37
VIII. CONDITIONS TO OBLIGATIONS OF THE STOCKHOLDERS . . . . . 37
8.1 Representations and Warranties. . . . . . . . . . . 37
8.2 Performance.. . . . . . . . . . . . . . . . . . . . 37
8.3 Officer's Certificate.. . . . . . . . . . . . . . . 37
8.4 No Injunction.. . . . . . . . . . . . . . . . . . . 37
IX. SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION/PURCHASE PRICE
ADJUSTMENT. . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.1 Survival of Representations.. . . . . . . . . . . . 37
9.2 Statements as Representations.. . . . . . . . . . . 38
9.3 Indemnification by Stockholders; Reduction of Purchase
Price.. . . . . . . . . . . . . . . . . . . . . . . 38
9.4 Set-Off of Note.. . . . . . . . . . . . . . . . . . 40
9.5 Conditions of Indemnification Regarding Third Party
Claims. . . . . . . . . . . . . . . . . . . . . . . 40
9.6 Indemnification by Trion. . . . . . . . . . . . . . 41
9.7 Investigations. . . . . . . . . . . . . . . . . . . 41
9.8 Remedies. . . . . . . . . . . . . . . . . . . . . . 41
9.9 Waiver of Claims Against Company. . . . . . . . . . 41
X. TERMINATION; AMENDMENT AND WAIVER. . . . . . . . . . . . . 42
10.1 Termination of Agreement. . . . . . . . . . . . . . 42
10.2 Effect of Termination.. . . . . . . . . . . . . . . 42
10.3 Post-Termination Obligations. . . . . . . . . . . . 42
10.4 Amendment, Extension and Waiver.. . . . . . . . . . 43
XI. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . 43
11.1 Best Knowledge. . . . . . . . . . . . . . . . . . . 43
11.2 Parties in Interest.. . . . . . . . . . . . . . . . 43
11.3 Entire Agreement. . . . . . . . . . . . . . . . . . 44
11.4 Headings. . . . . . . . . . . . . . . . . . . . . . 44
11.5 Notices.. . . . . . . . . . . . . . . . . . . . . . 44
11.6 Governing Law.. . . . . . . . . . . . . . . . . . . 45
11.7 Counterparts. . . . . . . . . . . . . . . . . . . . 45
11.8 Severability. . . . . . . . . . . . . . . . . . . . 45
11.9 Further Assurances. . . . . . . . . . . . . . . . . 46
11.10 Specific Performance.. . . . . . . . . . . . . . . 46
11.11 Consent to Jurisdiction. . . . . . . . . . . . . . 46
EXHIBIT A Envirco Corporation Total Outstanding Shares. . . . 50
EXHIBIT B FIXED RATE NON-NEGOTIABLE INSTALLMENT NOTE. . . . . 51
EXHIBIT C Representation Letter . . . . . . . . . . . . . . . 59
EXHIBIT D Maximum Indemnification Which Can Be Recovered
from Envirco Corporation Stockholders . . . . . . . 60
EXHIBIT E Addresses of Stockholders . . . . . . . . . . . . . 61
<PAGE>
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT, dated as of July 28, 1995, is
entered into by and among TRION, INC., a Pennsylvania corporation
("Trion"), ENVIRCO CORPORATION, a New Mexico corporation (the
"Company"), ALLIED INVESTMENT CORPORATION, a Maryland corporation
("AIC"), ALLIED INVESTMENT CORPORATION II, a Maryland corporation
("AIC II", which is collectively referred to herein with AIC as
the "Allied Companies"), and RICHARD V. DEMPSTER ("Dempster") and
JOHN I. LEAHY ("Leahy" and collectively with Dempster
"Dempster/Leahy"), and WILLIAM J. LEADER ("Leader"), and JOHNS
HOPKINS UNIVERSITY, a Maryland non-profit corporation, DAVID M.
SCHLEGEL, ELMER A. ERICKSON, RICHARD H. MARMON, ESTATE OF ROBERT
S. SUCHOMSKI, ARTHUR D. CLINE, JOHN P. CUMMINGS and JIMMY E.
ROYBAL (collectively, the "Current Stockholders").
W I T N E S S E T H:
WHEREAS, upon the terms and subject to the conditions of
this Agreement, Trion desires to acquire all of the issued and
outstanding shares of capital stock of the Company which consists
solely of Common Stock, no par value per share (the "Common
Stock"); and
WHEREAS, the Allied Companies currently are the owners of
warrants (the "Warrants") providing the right to purchase, in the
aggregate, 69,862.5 shares of Common Stock, (the "Allied Shares")
and is willing to sell such warrants to Trion; and
WHEREAS, each of Dempster/Leahy currently is the holder of a
Convertible Subordinated Debenture (the "Debenture") providing
the right to purchase 10,395.5 shares of Common Stock each
(20,791 shares total) (the "Dempster/Leahy Shares") and is
willing to exercise his rights to convert such Debenture and
thereafter sell the Dempster/Leahy Shares to Trion;
WHEREAS, Leader is currently the beneficiary of a Stock
Option Agreement which entitles him to purchase up to 4,000
shares of Common Stock (the "Leader Shares") and is willing to
exercise his option rights under the Stock Option Agreement (the
"Options") to purchase the Leader Shares and thereafter sell the
Leader Shares to Trion;
WHEREAS, the Current Stockholders currently are the sole
stockholders of the Company and are willing to sell to Trion
202,359 shares (the "Existing Shares") of Common Stock of the
Company, which Existing Shares currently constitute all of the
issued and outstanding capital stock of the Company (the Existing
Shares, the Allied Shares and Warrants, the Dempster/Leahy Shares
and the Leader Shares all as reflected in EXHIBIT A, are each
referred to collectively as the "Shares," and the Allied
Companies, Dempster, Leahy, Leader and the Current Stockholders
are each referred to individually as "a Stockholder" and
collectively as the "Stockholders").
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants, agreements and
conditions set forth herein, and intending to be legally bound
hereby, the parties hereto agree as follows:
I. PURCHASE AND SALE OF STOCK
1.1 SALE OF SHARES AND WARRANTS.
(a) The Allied Companies agree not to exercise the
Warrants and will sell them to Trion hereunder.
(b) Immediately prior to the Closing (as defined in
ARTICLE II hereof) Dempster/Leahy will exercise the
conversion features of the Debentures and will purchase from
the Company in accordance with the terms of the Debentures,
the Dempster/Leahy Shares.
(c) Immediately prior to the Closing (as defined in
ARTICLE II hereof) Leader will exercise the options
contained in the Stock Option Agreement and will purchase
from the Company in accordance with the terms of the Stock
Option Agreement, the Leader Shares.
(d) Upon the terms and subject to the conditions of
this Agreement and in reliance on the representations,
warranties and agreements of the parties contained herein,
at the Closing the Stockholders will sell, convey, assign,
transfer and deliver to Trion or any affiliate of Trion, and
Trion or such affiliate shall purchase from the
Stockholders, all of the Shares and the Warrants, free and
clear of all pledges, security interests, liens, claims,
proxies, options, charges, encumbrances and restrictions
whatsoever, except for such transfer restrictions as attach
to the Shares or Warrants under applicable federal and state
securities laws by reason of the failure to register the
Shares or Warrants under the registration provisions of such
federal or state securities laws.
1.2 PURCHASE PRICE AND PAYMENT; EMPLOYMENT AGREEMENTS AND
COVENANTS NOT TO COMPETE; ESCROW AGREEMENT; DEPOSIT OF EXISTING
SHARES.
(a) Upon the terms and subject to the conditions of
this Agreement and in reliance on the representations,
warranties and agreements contained herein and in
consideration of the sale, conveyance, assignment, transfer
and delivery of the Shares as specified in SECTION 1.1
hereof, Trion will deliver or cause to be delivered to
Escrow Agent (as hereinafter defined) on the Closing Date
(as defined in Article II hereof) at the Closing against
delivery of the Shares and Warrants the amount of
$7,650,126, subject to adjustment as provided in SECTION
1.3, SECTION 1.4 and ARTICLE IX hereof ("Purchase Price"),
of which Purchase Price (i) $7,150,126, subject to the
aforesaid adjustments, will be paid in cash or, at the
option of Trion, by wire transfer of immediately available
funds at the Closing and (ii) $500,000 of the Purchase Price
will be paid by delivery of Trion's Set-Off Installment Note
in the principal amount of $500,000 in the form of Exhibit B
attached hereto (the "Note") to be delivered to and held by
an escrow agent satisfactory to Trion and the Sellers' Agent
(hereinafter defined) (the "Escrow Agent"). The Escrow
Agent shall pay over to the respective Stockholder such
Stockholder's share of the Purchase Price based on the
percentages shown in the last column on Exhibit A.
(b) Simultaneously with the Closing, (i) the Company
and each of David M. Schlegel, Richard H. Marmon, Patrick
Cameron and Arthur D. Cline will enter into an Employment
Agreement, in the form of EXHIBITS 1, 2, 3 and 4 to the
Disclosure Schedule appended to this Agreement (the
"Disclosure Schedule") (the "Employment Agreements"),
pursuant to which each of them will be hired as an employee
of the Company, will agree to refrain from competing with
the Company and will receive the payments as set forth
therein and (ii) the Company and Elmer A. "Skip" Erickson
will enter into a Stock Option, Employment Continuation and
Non-Competition Agreement in the form of EXHIBIT 5 to the
Disclosure Schedule (the "Non-Compete Agreement"), pursuant
to which such individual will agree to continue employment
with the Company and refrain from competing with the Company
and will receive the payments and other benefits as set
forth in the Non-Compete Agreement.
(c) Each of the Current Stockholders will deposit prior
to the Closing with David M. Schlegel ("Sellers' Agent") the
certificates representing the Existing Shares owned by such
Current Stockholder duly endorsed in blank and to be held by
the Sellers' Agent in escrow pending the Closing. Sellers'
Agent shall hold the certificates representing the Existing
Shares deposited with it until the Closing Date, and on the
Closing Date, Sellers' Agent shall deliver such certificates
in accordance with this Agreement.
1.3 PURCHASE PRICE ADJUSTMENT AT CLOSING. At the Closing,
the Purchase Price shall be adjusted on a dollar for dollar basis
as follows:
(a) If as of the close of business on June 30, 1995
(the "Closing Calculation Date") the Working Capital of the
Company is (x) less than $2,454,284, the Purchase Price
shall be decreased by the amount of such deficiency or (y)
greater than $2,454,284, the Purchase Price shall be
increased by the amount of such excess. For purposes hereof,
Working Capital shall mean the current assets of the Company
less (x) current liabilities of the Company, (excluding all
third party indebtedness and subordinated debt of the
Company to the extent not a current liability) and (y) all
fees and expenses relating to this transaction accounted for
as an asset, all at the Closing Calculation Date. A
calculation of Working Capital as of June 30, 1995 is
described and set forth in SECTION 1.3(A) of the Disclosure
Schedule.
(b) If as of the Closing Calculation Date the Funded
Indebtedness of the Company is (x) less than $1,949,847, the
Purchase Price shall be increased by the amount of such
deficiency or (y) greater than $1,949,847, the Purchase
Price shall be decreased by the amount of such excess. For
purposes hereof, Funded Indebtedness shall mean all
indebtedness for money borrowed including, without
limitation, all revolving credit debt (whether or not
classified as long term debt) and the deferred purchase
price of any property or asset, any guarantees of any of the
foregoing and all other debt classified as long term debt,
all at the Closing Calculation Date. A list of Funded
Indebtedness as of (x) February 28, 1995 and (y) June 30,
1995 is set forth in SECTION 1.3(B) of the Disclosure
Schedule. At the election of Trion in its sole discretion,
all or a portion of any Funded Indebtedness may be paid off
at Closing, and the Company will provide Trion with
customary payoff letters from all holders of Funded
Indebtedness to be so paid and will make arrangements
satisfactory to Trion for such holders to provide lien
releases and cancelled notes simultaneously with Closing.
Any penalties, fees or damages to the Company in connection
with any such payment shall be borne by the Stockholders.
(c) If as of the Closing Calculation Date the Company
has any liabilities (direct, contingent or otherwise)
(collectively, "Other Liabilities") other than Current
Liabilities or Funded Indebtedness, the Purchase Price shall
be decreased by the amount of such liabilities. For purposes
hereof, Current Liabilities shall include accounts payable,
accrued payroll and commissions, fringe benefits and product
warranty reserves determined for the Company in accordance
with past practices. A list of Current Liabilities at June
30, 1995 is described and set forth in SECTION 1.3(C) of the
Disclosure Statement.
1.4 POST-CLOSING ADJUSTMENT.
(a) As soon as reasonably practicable after the Closing
Date but in no event more than 60 days after the Closing
Date (the "Closing Balance Sheet Delivery Date"), Trion
shall cause the Company to produce a balance sheet of the
Company as at the close of business on the day immediately
preceding the Closing Date (the "Determination Date") (the
"Closing Balance Sheet"), all certified by Trion's
independent certified public accountants and prepared in
accordance with generally accepted accounting principles
consistently applied. In the event the Working Capital,
Funded Indebtedness or Other Liabilities, each at the
Determination Date is different from the amounts used for
the adjustments set forth in SECTION 1.3 hereof, Trion and
the Stockholders shall make appropriate payments to the
other within ten (10) days of the Closing Balance Sheet
Delivery Date in order to reconcile such differences. In
connection with any adjustments requiring payments to Trion,
Trion may collect such amounts by a set-off under the Note.
The Closing Balance Sheet shall be prepared without expense
to the Stockholders.
(b) In the event that the Stockholders dispute the
amounts set forth on the Closing Balance Sheet, the
Stockholders may retain, at their expense, independent
accountants of their choice (the "Stockholder Accountants").
If the balance sheet as prepared by the Stockholder
Accountants reflects Working Capital, Funded Indebtedness or
Other Liabilities different from that reflected on the
Closing Balance Sheet, Trion may accept such balance sheet
and adjust the Purchase Price accordingly or, at Trion's
election in its sole discretion, it may require that the
final determination of the Closing Balance Sheet be referred
to a third firm of independent accountants (the "Independent
Accountants"). In such event, the Independent Accountants
shall be a firm agreed upon by Trion's accountants and the
Stockholder Accountants or, in the event of their failing to
agree, as chosen by the President of the American Institute
of Certified Public Accountants on Trion's application. Such
Independent Accountants shall determine the final Closing
Balance Sheet, which decision shall be binding on the
parties hereto except as otherwise provided herein. The
costs of the Independent Accountants shall be paid one-half
by Trion and one-half by the Stockholders.
II. CLOSING
Subject to the terms and conditions of this Agreement, the
closing of the transactions provided for herein (the "Closing")
shall take place at the offices of counsel for the Company,
Albuquerque, New Mexico, at l:00 p.m. (time) on August 1, 1995,
or at such other place, date and time as may be mutually agreed
upon in writing by Trion and the Stockholders. The date of the
Closing is sometimes referred to herein as the "Closing Date."
III. DELIVERIES AT THE CLOSING
3.1 DELIVERIES BY THE STOCKHOLDERS. At the Closing, the
Stockholders shall deliver or cause to be delivered to Trion
(unless previously delivered) the following:
(a) as requested by Trion, the resignation of each
director and officer of the Company as contemplated by
SECTION 7.11 hereof;
(b) the Employment Agreements;
(c) the Stock Option, Employment Continuation and Non-
Competition Agreements;
(d) the Warrants and the stock certificates
representing all of the Shares, with all necessary stock or
similar transfer tax stamps attached, accompanied by stock
powers or warrant assignments duly executed in blank, with
signatures guaranteed, and otherwise in form acceptable to
Trion for transfer on the books of the Company, together
with a release of liabilities of, or claims against, the
Company and, if requested by Trion, the Company shall issue
Trion on the Closing Date a new stock certificate or
certificates representing the Shares upon delivery to the
Company of the current certificates representing the Shares;
(e) a copy of the Articles of Incorporation and all
amendments thereto, and the By-laws, and all amendments
thereto, of the Company certified, in the case of the
Articles of Incorporation, as of a date within five days
prior to the Closing Date by the Secretary of State of New
Mexico and, in the case of the By-laws, as of the Closing
Date by the Secretary of the Company;
(f) certificates or telegrams from the Secretary of
State of New Mexico as to the good standing of, and from the
appropriate state taxing authority of such jurisdiction as
to the payment of taxes by, the Company, which certificates
or telegrams shall be dated not earlier than as of the first
business day immediately preceding the Closing Date;
(g) the minute books, stock transfer books and
corporate seals of the Company;
(h) the certificate referred to in SECTION 7.3 hereof;
(i) the opinion of counsel referred to in SECTION 7.4
hereof;
(j) copies of all consents and assignments set forth in
SECTION 4.4 of the Disclosure Schedule including, but not
limited to, all required consents and assignments relating
to the following:
(i) Lease Agreement relating to the manufacturing
facility located at 6701 Jefferson, NE, Albuquerque, NM
87109 (the "Jefferson Lease Agreement");
(ii) consents of the Company's auditors to use of
their report on the financial statements of the Company
in any governmental or securities laws filings required
to be made by Trion;
(iii) any consents of any holders of indebtedness
of the Company to the transactions contemplated hereby;
(iv) any consents required under the license
agreement with Johns Hopkins University;
(k) releases from the Allied Companies of any
obligations or liabilities of the Company to them and any
claims, options, rights or interests of the Allied Companies
in the Company;
(l) certificates of the Secretary of the Company
certifying certain matters as to the power and authority of
such entity with respect to the matters contemplated hereby,
and the authority of the signatories to this Agreement and
any document contemplated hereby to which the Company is a
party; and
(m) all other documents, instruments and writings,
including pay-off letters, and lien release assurances
contemplated by SECTION 1.3(B) hereof (including those
necessary to pay in full all liabilities to Sunwest Bank of
Albuquerque, N.A. and obtain a release of all liens of such
bank on Company assets), required to be delivered by the
Stockholders at or prior to the Closing pursuant to this
Agreement or otherwise required in connection herewith,
including, without limitation, certain releases of
indebtedness and obligations relating thereto contemplated
by SECTION 7.12 hereof, in order effectively to vest in
Trion and the Company the benefits contemplated hereby.
3.2 DELIVERIES BY TRION. At the Closing, Trion will deliver
or cause to be delivered to the Stockholders (unless previously
delivered) the following:
(a) the Purchase Price;
(b) the Note;
(c) the Employment Agreements;
(d) the Non-Compete Agreement;
(e) the certificate referred to in SECTION 8.3 hereof;
(f) certificates of the Secretary of Trion certifying
certain matters as to the power and authority of such entity
with respect to the matters contemplated hereby, and the
authority of the signatories to each of this Agreement and
the documents contemplated hereby;
(g) all other documents, instruments or writings
required to be delivered by Trion at or prior to the Closing
pursuant to this Agreement, or otherwise required in
connection herewith in order effectively to vest in the
Stockholders the benefits contemplated hereby and thereby;
(h) satisfactory evidence of the release by Sunwest
Bank of Albuquerque, N.A., of David M. Schlegel's personal
guaranty of all Company indebtedness payable to said bank;
and
(i) the Securities Law Representation Letter.
IV. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
Each of the Stockholders hereby represents and warrants to
Trion as follows:
4.1 OWNERSHIP OF SHARES. The Current Stockholders own and
at the Closing will have the unqualified right to transfer, and
will transfer to Trion at the Closing, good, valid and marketable
title to the Existing Shares, free and clear of all pledges,
security interests, liens, claims, proxies, options, charges,
encumbrances and restrictions whatsoever. Each of Leader,
Dempster/Leahy and the Allied Companies owns good, valid and
marketable title to the Options, Debentures or Warrants, as the
case may be, free and clear of all pledges, security interests,
liens, claims, proxies, options, charges, encumbrances and
restrictions whatsoever. At the Closing (i) the Allied Companies
will own and will have the unqualified right to transfer, and
will transfer to Trion at the Closing, good, valid and marketable
title to the Warrants, free and clear of all pledges, security
interests, liens, claims, proxies, options, charges, encumbrances
and restrictions whatsoever, (ii) Leader will own and will have
the unqualified right to transfer, and will transfer to Trion at
the Closing, good, valid and marketable title to the Leader
Shares, free and clear of all pledges, security interests, liens,
claims, proxies, options, charges, encumbrances and restrictions
whatsoever and (iii) each of Dempster and Leahy will own and will
have the unqualified right to transfer, and will transfer to
Trion at the Closing, good, valid and marketable title to the
Dempster/Leahy Shares, free and clear of all pledges, security
interests, liens, claims, proxies, options, charges and
restrictions whatsoever.
The authorized capital stock of the Company is 500,000
shares of Common Stock and the number of shares of such capital
stock issued and outstanding as of the date hereof is 202,359
shares of Common Stock. The Existing Shares constitute all of the
outstanding shares of capital stock of the Company as of the date
hereof. As of the Closing Date, the number of Shares issued and
outstanding shall be 297,012.5 shares of Common Stock giving
effect to the exercise of the Warrants and 227,150 shares if the
Warrants are not exercised. The Existing Shares are (and the
Allied Shares and Warrants, the Dempster/Leahy Shares, and the
Leader Shares, upon issue, will be) validly issued, fully paid
and nonassessable and no person, corporation, partnership or
other entity has or will have any preemptive right of
subscription, purchase or otherwise in respect of all of the
Shares.
Except as set forth in SECTION 4.1 of the Disclosure
Schedule, the Company has no outstanding securities convertible
into or evidencing the right to purchase or subscribe for any
shares of capital stock of the Company, and the Company has no
outstanding or authorized subscriptions, options, warrants,
calls, rights, commitments or other agreements of any character
obligating it to issue any shares of its capital stock or any
securities convertible into or evidencing the right to purchase
or subscribe for any shares of such stock. Other than this
Agreement, neither the Company nor any of the Stockholders is a
party to or bound by any agreement or understanding with respect
to the voting, sale or transfer of shares of the capital stock of
the Company.
4.2 ORGANIZATION AND GOOD STANDING; BOOKS AND RECORDS;
DIRECTORS AND OFFICERS.
(a) The Company is a corporation duly organized,
validly existing and in good standing under the laws of the
State of New Mexico. The Company has the corporate power and
authority to own, operate and lease its properties,
contracts and other assets of every kind, nature, character
and description, whether real, personal or mixed, whether
tangible or intangible, whether accrued, contingent or
otherwise and wherever situated and to carry on its business
as now being conducted. The Company is duly qualified to do
business as a foreign corporation and is in good standing in
each jurisdiction where the character of the properties
owned or leased by it or the nature of its activities makes
such qualification necessary.
(b) The minute book(s) and stock issuance and transfer
records of the Company, as made available to Trion and its
representatives, contain complete and accurate records of
all meetings, and accurately reflect all other corporate
action, of the Shareholders of the Company and the Board of
Directors of the Company at the time such meetings were held
or actions taken and accurately reflect all transfers of the
Company's capital stock.
(c) SECTION 4.2 of the Disclosure Schedule sets forth
(i) a complete and correct list of all directors and
officers of the Company, and (ii) the name, social security
number, total compensation (estimated for the current fiscal
year) and position held of each person who is now a
director, officer, employee, consultant, agent or other
representative of the Company. None of the individuals
listed in SECTION 4.2 of the Disclosure Schedule has
indicated that he or she will cancel or otherwise terminate
such person's relationship with the Company and, to his or
its best knowledge, no such person, except to the extent
requested by Trion, will cancel or otherwise terminate such
person's relationship with the Company as the result of the
acquisition of the Shares by Trion and the consummation of
the transactions provided for herein.
4.3 AUTHORIZATION. The Company has all requisite corporate
power and authority to enter into this Agreement and to carry out
its obligations hereunder. The execution and delivery of this
Agreement by the Company and the consummation by the Company of
the transactions contemplated hereby have been duly authorized by
the Company's Board of Directors, and no other corporate action
or proceeding on the part of the Company or any other party is
necessary for the execution or delivery of this Agreement or for
the consummation by the Company of the transactions contemplated
hereby. The Stockholder has the legal capacity and authority to
enter into this Agreement and the other agreements contemplated
hereby to which such Stockholder is a party and to carry out his
or its obligations hereunder and thereunder. This Agreement and
the other agreements contemplated hereby have been duly executed
and delivered by the Company and the Stockholder and (assuming
this Agreement and such other agreements have been duly executed
and delivered by Trion and other parties thereto) are legally
valid and binding obligations of the Company and the
Stockholders, enforceable against the Company and the Stockholder
in accordance with their respective terms except to the extent
that (a) the foregoing may be subject to bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors'
rights and (b) the remedy of specific performance and injunctive
and other forms of equitable relief are subject to certain
equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought. No power of
attorney has been granted and is currently in force by the
Stockholder or the Company with respect to any matter relating to
the Company or its business, operations or assets.
4.4 CONSENTS AND APPROVALS. The execution, delivery and
performance of this Agreement or the other agreements
contemplated hereby to be executed by any of the Stockholders or
the Company and the consummation by them of the transactions
contemplated hereby or thereby will not, with or without notice
or passage of time, or both, (a) violate any provision of the
charter or by-laws of the Company or Allied, (b) violate any law,
rule, regulation, ordinance, order, writ, injunction, judgment or
decree applicable to the Stockholder or the Company or by which
any of their properties or assets are bound or affected, or (c)
conflict with, or result in the breach or termination of any
provision of, or constitute a default under, or result in
acceleration of the performance of the obligations of the
Stockholder or the Company under, or result in the creation of a
lien, charge or encumbrance upon any of the properties or assets
of the Stockholder or the Company pursuant to, the terms,
conditions or provisions of any note, bond, mortgage, deed of
trust, indenture, permit, lease, franchise agreement, license,
contract, instrument or other agreement, or any order, judgment
or decree, to which the Stockholder or the Company is a party or
by which any of them or any of their assets or properties is
bound or affected.
Except as otherwise disclosed in SECTION 4.4 of the
Disclosure Schedule, no waiver by and no consent, approval,
authorization or action of or filing with, any third party or any
governmental or regulatory authority or instrumentality is
required by the Stockholder or the Company in connection with the
(i) execution, delivery or performance of this Agreement or such
other agreements related hereto by the Stockholder or the Company
and (ii) the consummation of the transactions contemplated hereby
or thereby.
4.5 LITIGATION. Except as set forth in SECTION 4.5 of the
Disclosure Schedule, (i) there is no action, proceeding, claim,
suit or investigation of any kind pending or, to his or its best
knowledge, threatened by, against or involving the Company, and
to the best of his or its knowledge, there is no valid basis for
any such action, proceeding, claim, suit or investigation, and
(ii) there is no judgment, decree, injunction, rule or order of
any court, governmental department, commission, agency,
instrumentality or arbitrator outstanding against the Company or
otherwise affecting its business or operations (the matters
referred to in clauses (i) and (ii) referred to collectively as
"Litigation").
4.6 CONTRACTS AND OTHER AGREEMENTS. SECTION 4.6 of the
Disclosure Schedule sets forth a correct and complete list and
brief description of the following:
(i) All mortgages, deeds of trust, indentures,
agreements, contracts, arrangements, commitments,
instruments, understandings or obligations, oral and
written, to which the Company is a party or to which any of
its properties or assets are subject, which individually
involve or will involve an expenditure by the Company of
more than $25,000 and which are to be performed by any party
in whole or in part on or after the date hereof;
(ii) All leases of, and other agreements setting forth
rights to, personal property to which the Company is a party
requiring, in the aggregate, the payment of rental in excess
of $20,000 in any Fiscal Year;
(iii) All employment and consulting agreements either
evidenced by separate writings to which the Company is a
party or which are not terminable by the Company at will
without penalty;
(iv) All loan or credit agreements or other contracts
or agreements of the Company relating to indebtedness of the
Company for borrowed money or credit arrangements or to
guarantees by the Company of the obligations of any other
person;
(v) All contracts and other agreements with any person
to sell, distribute or otherwise market any products
manufactured or distributed by the Company;
(vi) All contracts and other agreements with any person
for the manufacture of any products sold or distributed by
the Company;
(vii) Any contract or other agreement containing
covenants or agreements of the Company not to compete in any
line of business or with any person in any geographical area
or covenants or agreements of any other person not to
compete with the Company in any line of business or in any
geographical area; and
(viii) The amounts and terms of all loans or advances
to directors, officers and employees of the Company.
There have been made available to Trion true and complete copies
of all contracts and other agreements set forth in SECTION 4.6 of
the Disclosure Schedule. All of such contracts and other
agreements are valid and binding upon the Company, and neither
the Company nor, to his or its best knowledge, any other party,
is in default thereunder in any material respect. To his or its
best knowledge, SECTION 4.6 of the Disclosure Schedule also lists
all contracts and other agreements currently in negotiation or
proposed by the Company of a type which if entered into by the
Company would be required to be listed in SECTION 4.6 of the
Disclosure Schedule, and the Company has made available to Trion
true and correct drafts or summaries of all such contracts and
other agreements in negotiation or proposed and true and complete
copies of all documents in the custody or control of the Company
relating thereto. None of the rights of the Company under any of
the contracts and agreements set forth in SECTION 4.6 of the
Disclosure Schedule will be materially adversely affected by
consummation of the transactions provided for in this Agreement.
4.7 CUSTOMERS AND SUPPLIERS. SECTION 4.7 of the Disclosure
Schedule lists, by dollar volume paid for the fiscal year ended
February 28, 1995, the ten largest customers of the Company and
the five largest suppliers of the Company and their respective
names and addresses. To his or its best knowledge (i) no person
listed in SECTION 4.7 of the Disclosure Schedule intends or
within the last twelve months has threatened to cancel or
otherwise terminate the relationship of such person with the
Company, (ii) no such person intends to modify materially its
relationship with the Company or to decrease materially or limit
materially services, supplies or materials to the Company or its
usage or purchase of the products of the Company, as the case may
be, and (iii) the acquisition of the Shares by Trion and the
consummation of the transactions contemplated hereby will not
affect in any material respect the relationship of the Company
with any customer or supplier listed in SECTION 4.7.
4.8 TITLE TO PROPERTIES; ABSENCE OF LIENS AND ENCUMBRANCES.
The Company has good and marketable title to its properties and
assets (including, without limitation, the assets reflected on
the Interim Balance Sheet (as defined in SECTION 4.15 hereof),
except as sold or otherwise disposed of in the ordinary course of
business since the date of the Interim Balance Sheet), free and
clear of all mortgages, deeds of trust, claims, liens, security
interests and other encumbrances, except (i) as specifically
disclosed in the Interim Balance Sheet or the footnotes thereto,
(ii) as specifically set forth in SECTION 4.8 of the Disclosure
Schedule, (iii) liens for taxes not yet due and payable, and (iv)
such imperfections of title, easements, pledges, liens and
encumbrances, if any, as do not materially detract from the value
or interfere with the present or future use of the properties of
the Company or otherwise materially impair the Company's business
operations and which do not secure obligations for borrowed money
or the deferred portion of the purchase price of acquired
property.
4.9 BANK ACCOUNTS. SECTION 4.9 of the Disclosure Schedule
sets forth the names and locations of all banks, trust companies,
savings and loan associations and other financial institutions at
which the Company maintains safe deposit boxes or accounts of any
nature and the names of all persons authorized to draw thereon,
make withdrawals therefrom or have access thereto.
4.10 PATENTS, TRADEMARKS AND TRADE NAMES. SECTION 4.10 of
the Disclosure Schedule sets forth a list of all patents,
registered trademarks, trade names, copyrights and registered
service marks owned or used by the Company. The Company owns, or
is licensed or otherwise has the full right to use, all patents,
trademarks, trade names, copyrights, technology, know-how,
computer software (including, without limitation, all computer
programs, data bases and documentation) created or used by the
Company, all service marks, service registrations and
applications therefor, information owned by, or registered in the
name of, the Company, or used in the business of the Company, and
processes currently used in or necessary for the conduct of its
business as currently conducted (collectively, the "Proprietary
Rights"). The use of the Proprietary Rights by the Company does
not infringe on the rights of any person. No claim has been
asserted by any person with respect to the use of the Proprietary
Rights or challenging the validity or effectiveness of any such
license. To his or its best knowledge and except as shown on
SECTION 4.10 of the Disclosure Schedule, no other person is
infringing on the rights of the Company to or in the Proprietary
Rights. No claim has been asserted by the Company with respect to
the use of the Proprietary Rights or challenging the validity or
effectiveness of any such license.
4.11 EMPLOYEE BENEFIT PLANS; ERISA.
(a) SECTION 4.11 of the Disclosure Schedule contains a
true and complete list of each bonus, deferred compensation,
incentive compensation, stock purchase, stock option,
severance or termination pay, hospitalization or other
medical, life or other insurance, supplemental unemployment
benefits, profit-sharing, pension, or retirement plan,
program, agreement or arrangement, and each other benefit
plan, program, agreement or arrangement providing for
current or future benefits to the Company's directors,
officers, employees, agents, consultants or other
independent contractors, maintained or contributed to or
required to be contributed to by the Company or by any trade
or business, whether or not incorporated (an "ERISA
Affiliate"), that together with the Company would be deemed
a "single employer" within the meaning of Section 4001 of
the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated
thereunder ("ERISA"), for the benefit of any employee or
terminated employee of the Company or any ERISA Affiliate,
whether formal or informal and whether legally binding or
not (the "Plans"). SECTION 4.11 of the Disclosure Schedule
identifies each of the Plans which has been either operated
or administered as an "employee benefit plan," as that term
is defined in Section 3(3) of ERISA (such plans being
hereinafter referred to collectively as the "ERISA Plans").
Neither the Company nor any ERISA Affiliate has any formal
plan or commitment, whether legally binding or not, to
create any additional Plan or modify or change any existing
Plan that would affect any employee or terminated employee
of the Company or any ERISA Affiliate.
(b) With respect to each of the Plans, the Company has
heretofore delivered to Trion true and complete copies of
each of the following documents:
(i) a copy of the Plan (including all amendments
thereto) and all other documents encompassing or
embodying each other Plan;
(ii) a copy of every Form 5500 (the "Form 5500
Returns") filed with respect to each such Plan for the
last two years;
(iii) a copy of the most recent Summary Plan
Description, together with each Summary of Material
Modifications, existing with respect to such Plan;
(iv) if the Plan is funded through a trust or any
third party funding vehicle, a copy of the current
trust or other funding agreement (including all
amendments thereto) and the latest financial statements
thereof;
(v) the most recent determination letter received
from the Internal Revenue Service with respect to each
Plan that is intended to be qualified under Section 401
of the Internal Revenue Code of 1986, as amended and
effective to the date hereof (the "Code"); and
(vi) the most recent actuarial valuation for each
such Plan that is an "employee pension benefit plan"
within the meaning of ERISA.
(c) Neither the Company nor any ERISA Affiliate
maintains, or has ever maintained, a plan that is covered by
Title IV of ERISA.
(d) Neither the Company nor any ERISA Affiliate, nor
any of the ERISA Plans, nor any trust created thereunder,
nor any trustee or administrator thereof has engaged in a
transaction in connection with which the Company or any
ERISA Affiliate, any of the ERISA Plans, any such trust, or
any trustee or administrator thereof, or any party dealing
with the ERISA Plans or any such trust could be subject to
either a civil penalty assessed pursuant to Section 409 or
502(i) of ERISA or a tax imposed pursuant to Section 4975 or
4976 of the Code.
(e) With respect to each ERISA Plan subject to Section
404(a) of the Code, full payment has been made, or will be
made in accordance with Section 404(a)(6) of the Code, of
all amounts which the Company or any ERISA Affiliate is
required to pay under Section 404(a) of the Code as of the
last day of the most recent plan year thereof ended prior to
the date of this Agreement, and all such amounts properly
accrued through the Closing Date with respect to the current
plan year thereof will be paid by the Company on or prior to
the Closing Date or will be properly recorded on the Balance
Sheet; and none of the ERISA Plans subject to Section 412 of
the Code, or any trust established thereunder, has incurred
any "accumulated funding deficiency" (as defined in Section
302 of ERISA and Section 412 of the Code), whether or not
waived, as of the last day of the most recent fiscal year of
each of the ERISA Plans ended prior to the date of this
Agreement.
(f) Neither the Company nor any ERISA Affiliate
maintains or has ever maintained a "multiemployer pension
plan," as such term is defined in Section 3(37) of ERISA.
(g) Each of the Plans has been operated and
administered in all material respects in accordance with
ERISA and the Code.
(h) Each of the Plans which is intended to be
"qualified" within the meaning of Section 401(a) of the Code
has received a favorable determination letter from the
Internal Revenue Service determining it to be so qualified
and has not received a subsequent letter from the Internal
Revenue Service determining it to be not qualified.
(i) No amounts payable under the Plans will fail to be
deductible for federal income tax purposes by virtue of
Section 280G of the Code.
(j) No "leased employee," as that term is defined in
Section 414(n) of the Code, performs services for the
Company or any ERISA Affiliate.
(k) No Plan provides benefits, including, without
limitation, death or medical benefits (whether or not
insured), with respect to current or former employees of the
Company or any ERISA Affiliate beyond their retirement or
other termination of service (other than (i) coverage
mandated by applicable law, (ii) death benefits or
retirement benefits under any "employee pension plan," as
that term is defined in Section 3(2) of ERISA, (iii)
deferred compensation benefits accrued as liabilities on the
books of the Company or the ERISA Affiliates or (iv)
benefits the full cost of which is borne by the current or
former employee (or his beneficiary).
(l) The consummation of the transactions contemplated
by this Agreement will not (i) entitle any current or former
employee or officer of the Company or any ERISA Affiliate to
severance pay, unemployment compensation or any other
payment, except as expressly contemplated by this
Agreement, (ii) accelerate the time of payment or vesting,
or increase the amount of compensation due any such employee
or officer, or (iii) result in any prohibited transaction
described in Section 406 of ERISA or Section 4975 of the
Code for which an exemption is not available.
(m) With respect to each Plan that is funded wholly or
partially through an insurance policy, self-funding
arrangement or other similar liability sharing arrangement,
there will be no liability of the Company or an ERISA
Affiliate, as of the Closing Date, under any such insurance
policy, ancillary agreement or arrangement in the nature of
a retroactive rate adjustment, loss sharing arrangement or
other actual or contingent liability arising wholly or
partially out of events occurring prior to the Closing Date.
(n) Except as set forth in SECTION 4.5 of the
Disclosure Schedule, there are no pending or, to his or its
best knowledge, threatened or, anticipated claims by or on
behalf of any of the Plans, by any employee or beneficiary
covered under any such Plan other than routine claims for
benefits.
4.12 TAX MATTERS.
(a) The Company is classified as a C corporation for
federal income tax purposes and is not currently, nor has
ever been, a member of an affiliated group which files a
consolidated federal income tax return.
(b) The Company has filed all returns, declarations,
reports, estimates, information returns and statements
("Returns") required to be filed under U.S. federal, state,
local or any foreign laws by the Company, and all such
Returns were in all respects (and, as to Returns not filed
as of the date hereof which are required to be filed prior
to the Closing, will be) true, complete and correct in all
material respects, filed on a timely basis and reflect
accurately the tax liabilities of the Company for the
periods, properties or events covered.
(c) The Company has, within the time and in the manner
prescribed by law, paid all Taxes (as hereinafter defined)
that are due and payable.
(d) The Company has established on its books and
records reserves that are adequate for the payment of all
Taxes not yet due and payable and there shall be no
difference between the amounts of the book basis and the tax
basis of assets (net of liabilities) that are not accounted
for by an accrual on the books for federal income tax
purposes.
(e) There are no liens for Taxes upon the assets of the
Company except liens for Taxes not yet due and incurred in
the ordinary course of business.
(f) The Company has complied in all respects with all
applicable laws, rules and regulations relating to the
payment and withholding of Taxes (including, without
limitation, withholding of Taxes pursuant to Sections 1441
and 1442 of the Code or similar provisions under any
foreign laws) and has, within the time and in the manner
prescribed by law, withheld from employee wages and paid
over to the proper governmental authorities all amounts
required to be so withheld and paid over under all
applicable laws.
(g) The Company has not requested any extension of time
within which to file any Return, which Return has not since
been filed.
(h) Except as set forth in SECTION 4.12 of the
Disclosure Schedule (which sets forth the type of return,
date filed, and date of expiration of the statute of
limitations), (i) the statute of limitations for the
assessment of federal, state, local and foreign income taxes
for purposes other than fraud has expired for all returns of
the Company or those returns have been subject to audit by
the appropriate taxing authorities for all periods and (ii)
no deficiency for any Taxes has been proposed, asserted or
assessed against the Company which has not been resolved and
paid in full.
(i) There are no outstanding waivers or comparable
consents regarding the extension of the statute of
limitations with respect to any Taxes or Returns that have
been given by the Company.
(j) Except as set forth in SECTION 4.12 of the
Disclosure Schedule (which sets forth the nature of the
proceeding, the type of return, the deficiencies proposed or
assessed and the amount thereof, and the taxable year in
question), no federal, state, local or foreign audits or
other administrative proceedings or court proceedings are
presently pending with regard to any Taxes or Returns.
(k) Except as listed in SECTION 4.12 of the Disclosure
Schedule, no power of attorney of either the Company or the
Stockholder is or at the Closing will be in force with
respect to any matter relating to Taxes.
(l) The Company has not filed (and will not file prior
to the Closing) a consent pursuant to Section 341(f) of the
Code or agreed to have Section 341(f)(2) of the Code apply
to any disposition of a subsection (f) asset (as such term
is defined in Section 341(f)(4) of the Code) owned by the
Company.
(m) No property of the Company is property that the
Company or any party to this transaction is or will be
required to treat as being owned by another person pursuant
to the provisions of Section 168(f)(8) of the Code (as in
effect prior to amendment by the Tax Reform Act of 1986) or
is "tax-exempt use property" within the meaning of Section
168 of the Code.
(n) The Company is not required to include in income
any adjustment pursuant to Section 481(a) of the Code by
reason of a voluntary or involuntary change in accounting
method and the Company has no knowledge that the Internal
Revenue Service has proposed any such adjustment or change
in accounting method.
(o) The Company is not a party to any agreement,
contract or arrangement that would result, separately or in
the aggregate, in the payment of any "excess parachute
payments" within the meaning of Section 280G of the Code.
For purposes of this Agreement, "Taxes" shall mean all
taxes, charges, fees, levies or other assessments, including,
without limitation all net income, gross income, gross receipts,
sales, use, ad valorem, transfer, franchise, profits, license,
withholding, payroll, employment, excise, estimated, severance,
stamp, occupation, intangible personal property, property or
other taxes, customs duties, fees, assessments or charges of any
kind whatsoever, together with any interest and penalties,
additions to tax or additional amounts imposed by any taxing
authority (domestic or foreign) upon the Company.
4.13 INSURANCE. SECTION 4.13 of the Disclosure Schedule
contains an accurate and complete description of all policies of
liability, fire, workers' compensation and other forms of
insurance owned or held by the Company insuring the products,
properties, assets, businesses and operations of the Company
(including a statement of the amounts of product liability
coverage remaining under such policies for each fiscal year
commencing with fiscal 1995), true and complete copies of which
have been made available to Trion. The premiums due under all
such policies have been fully paid, and all such policies are
valid, binding, enforceable and in full force and effect, are
underwritten or reinsured by unaffiliated insurers, are
sufficient for all applicable requirements of law, and provide
insurance, including, without limitation, liability and products
liability insurance, in such amounts and against such risks as
the Stockholder reasonably believes to be adequate to protect the
properties, assets, business and operations of the Company. All
such policies will remain in full force and effect after the
Closing Date through their stated expiration dates and will not
lapse or be otherwise affected by the completion of the
transactions contemplated hereby.
There are no outstanding unpaid claims under any such
policies, and the Company has not received any notice of
cancellation or non-renewal of any such policy or binder. The
Company has not received any notice from any of its insurance
carriers that any insurance premiums will be materially increased
in the future or that any insurance coverage listed in SECTION
4.13 of the Disclosure Schedule will not be available in the
future on substantially the same terms as now in effect.
4.14 BROKERS. Neither the Stockholder nor or the Company has
engaged any finder or broker to act on his or its behalf in
connection with this transaction.
4.15 FINANCIAL STATEMENTS.
(a) The balance sheets of the Company as at February 28
in each of the years 1994 and 1995 (said balance sheet as of
February 28, 1995 herein called the "1995 Balance Sheet")
and statements of income, cash flow and changes in
stockholders' equity for each of the years then ended, in
each case audited by KPMG Peat Marwick, independent
certified public accountants, previously delivered to Trion,
are true, complete and accurate and fairly present the
assets, liabilities and financial condition of the Company
as at the dates thereof and the results of operations for
the periods then ended, all in accordance with generally
accepted accounting principles ("GAAP") consistently applied
throughout the periods involved.
(b) The unaudited balance sheet of the Company as at
June 30, 1995 (the "Interim Balance Sheet"), and unaudited
statements of income, cash flow and changes in stockholders'
equity for the four months then ended, previously delivered
to Trion, are true, complete and accurate and fairly present
the assets, liabilities and financial condition of the
Company as at June 30, 1995 and the results of operations
for the period then ended, all in accordance with GAAP
consistently applied throughout the periods involved.
4.16 TITLE TO REAL ESTATE: LEASES. The Company does not own
any real property except the leasehold covered by the Jefferson
Lease Agreement. SECTION 4.16 of the Disclosure Schedule sets
forth a correct and complete list of all real property leased by
the Company (the "Real Property") and includes the name of the
lessor. To his or its best knowledge, the buildings, structures
and improvements included within the Real Property (collectively,
the "Improvements") comply with all applicable restrictions,
building ordinances and zoning ordinances and all regulations of
the applicable health and fire departments, and no material
alteration, repair, improvement or other work has been performed
in respect to such Improvements within the last 120 days. To his
or its best knowledge, the Improvements and the mechanical
systems situated therein, including without limitation the
heating, electrical, air conditioning and plumbing systems, are
in good operating condition and repair, ordinary wear and tear
excepted, and are adequate and suitable for the purposes for
which they are presently being used, and the roof of each
Improvement is in satisfactory condition and is not in need of
current repair. The Real Property and its continued use,
occupancy and operation as currently used, occupied and operated
does not constitute a nonconforming use under any law, code,
ordinance, rule, regulation or order affecting the Real Property,
and the continued existence, use, occupancy and operation of each
Improvement, and the right and ability to repair such Improvement
in the event of casualty, is not dependent on any special permit,
exception, approval or variance. There are no encroachments upon
any of the Real Property, and no portion of any building,
structure or improvement leased by the Company encroaches upon
any property not included within the Real Property or upon the
area of any easement affecting the Real Property. Each
Improvement has direct access, believed to be adequate for the
operation of the business of the Company in the ordinary course,
to a public street adjoining the Real Property on which such
Improvement is situated, and no existing way of access to any
Improvement crosses or encroaches upon any property or property
interest not leased by the Company. There is no condemnation
proceeding pending or, to his or its best knowledge, threatened
with respect to any of the Real Property.
4.17 NO UNDISCLOSED LIABILITIES. Except as and to the extent
of the amounts specifically reflected or reserved against in the
1995 Balance Sheet and except for liabilities and obligations
incurred since February 28, 1995 in the ordinary and usual course
of business consistent with past practice, the Company does not
have any liabilities or obligations of any nature (whether
absolute, accrued, contingent or otherwise and whether due or to
become due); and there is no basis for the assertion against the
Company of any such liability or obligation (i) not fully
reflected or reserved against in the 1995 Balance Sheet or (ii)
not incurred in the ordinary and usual course of business
consistent with past practice since February 28, 1995. Except as
set forth in SECTION 4.17 of the Disclosure Schedule, the Company
does not have any outstanding loan to any person and does not
have any obligations or liabilities (whether absolute, accrued,
contingent or otherwise), as guarantor, surety, co-signer,
endorser, co-maker, indemnitor or otherwise in respect of the
obligation of any person, corporation, partnership, joint
venture, association, organization or other entity.
4.18 INSIDER INTERESTS. Except as disclosed in SECTION 4.18
of the Disclosure Schedule, neither the Stockholder nor any
officer or director of the Company has any interest in any
property, real or personal, tangible or intangible, including,
without limitation, the Real Property and the Proprietary Rights,
used in or pertaining to the business of the Company.
4.19 ABSENCE OF QUESTIONABLE PAYMENTS. Neither the Company,
the Stockholder, any director, nor, to his or its best knowledge,
any officer, agent, employee or other person acting on behalf of
the Company or the Stockholder, has used any corporate or other
funds for unlawful contributions, payments, gifts or
entertainment, or made any unlawful expenditures relating to
political activity to government officials or others. Neither the
Company, the Stockholder, any director, nor, to his or its best
knowledge, any officer, agent, employee or other person acting on
behalf of the Company or the Stockholders, has accepted or
received any unlawful contributions, payments, gifts, or
expenditures.
4.20 ABSENCE OF CERTAIN CHANGES. Except as and to the extent
set forth in SECTION 4.20 of the Disclosure Schedule or as
reflected in the 1995 Balance Sheet, since February 28, 1995, the
Company has not:
(i) suffered any change in its working capital,
financial condition, results of operations, assets,
liabilities or prospects, or experienced any labor
difficulty or suffered any casualty loss (whether or not
insured), any of which could have a material adverse effect
on the Company;
(ii) made any change in its business or operations or
in the manner of conducting its business other than changes
in the ordinary and usual course of business consistent with
past practice;
(iii) incurred any obligations or liabilities (whether
absolute, accrued, contingent or otherwise and whether due
or to become due), except those incurred in the ordinary and
usual course of business consistent with past practice, or
experienced any change in any assumptions underlying or
methods of calculating any bad debt, contingency or other
reserves;
(iv) incurred any indebtedness for borrowed money
except indebtedness for advances made in the ordinary course
of business under the Company's existing line of credit;
(v) paid, discharged or satisfied any claim, lien,
encumbrance or liability (whether absolute, accrued,
contingent or otherwise and whether due or to become due),
other than claims, liens, encumbrances or liabilities which
(A) are current liabilities reflected or reserved against in
the 1995 Balance Sheet and current liabilities incurred
after February 28, 1995 in the ordinary course of business
consistent with past practice and which were paid,
discharged or satisfied in the ordinary and usual course of
business consistent with past practice or (B) were paid,
discharged or satisfied as required under this Agreement;
(vi) permitted or allowed any of its properties or
assets (whether real, personal or mixed, tangible or
intangible) to be mortgaged, pledged or subjected to any
lien, encumbrance, restriction or charge of any kind;
(vii) written off or determined to write off as
uncollectible any of its notes or accounts receivable or any
portion thereof, except for write-offs in the ordinary
course of business consistent with past practice at a rate
no greater than during the six months ended February 28,
1995, or written down or determined to write down the value
of any inventory, including, but not limited to, any such
write-downs by reason of inventory shrinkage or inventory
mark-down;
(viii) cancelled any debts or claims, or waived any
rights, except for any cancellations or waivers given in
respect of full payment therefor;
(ix) sold, transferred or conveyed any of its
properties or assets (whether real, personal or mixed,
tangible or intangible), except (a) at the fair market value
of such properties or assets and (b) in the ordinary and
usual course of business consistent with past practice;
(x) acquired any material assets, except for the
purchase of raw materials in the ordinary course of business
or made any capital expenditures, commitments or projections
for additions to property, plant, equipment or intangible
capital assets ("Capital Expenditures") in the aggregate in
excess of $25,000;
(xi) disposed of or permitted to lapse, or otherwise
failed to preserve, any Proprietary Rights, disposed of or
permitted to lapse any license, permit or other form of
authorization which would have a material adverse effect on
the Company, or disposed of or disclosed to any person,
other than authorized representatives of Trion, any customer
list, trade secret, formula, process or know-how;
(xii) except in the ordinary and usual course of
business consistent with past practice, or as otherwise
contemplated hereunder, (i) granted or promised any increase
in the compensation of any officer or employee of the
Company (including, without limitation, any increase
pursuant to any bonus, pension, profit sharing or other plan
or commitment) or any increase in the compensation payable
or to become payable to any officer or employee of the
Company, and no such increase is customary on a periodic
basis or required by agreement or understanding, or (ii)
instituted or adopted any new benefit programs, plans or
other arrangements for any officer or employee of the
Company;
(xiii) except as required by any retirement plan
described in SECTION 4.11 of the Disclosure Schedule, made
any pension, retirement, profit sharing, bonus, severance or
other employee welfare or benefit payment to any officer or
employee of the Company and no such payment is customary on
a periodic basis or required by agreement or understanding;
(xiv) declared, paid or made or set aside for payment
or making, any dividend or other distribution in respect of
its capital stock or other securities, or directly or
indirectly redeemed, purchased or otherwise acquired any of
its capital stock or other securities;
(xv) issued, authorized for issuance or proposed the
issuance of any shares of the capital stock of the Company,
or securities convertible into, or rights, warrants or
options to acquire, any such shares or other convertible
securities;
(xvi) made any change in any method of accounting or
accounting practice, including, without limitation, reserve
write-backs;
(xvii) paid (except for base and incentive compensation
payable in the usual and ordinary course of business
consistent with past practice), loaned or advanced any
amount to or in respect of, or sold, transferred or leased
any properties or assets (whether real, personal or mixed,
tangible or intangible) to, or entered into any agreement,
arrangement or transaction with any of the Stockholders, any
of the officers, directors, employees, consultants, agents
or other representatives of the Company, any affiliate or
associate of the Stockholder or the Company, or of any
officer or director of the Company, or any business or
entity in which the Stockholder, the Company, any officer or
director of the Company, or any affiliate or associate of
any such persons, has any direct or indirect interest,
except for advances made to employees of the Company for
travel and other business expenses in amounts in the
ordinary and usual course of business consistent with past
practice, in the aggregate not in excess of $5,000;
(xviii) entered into any lease, as lessor or lessee, of
real or personal property which cannot be terminated without
penalty on not more than sixty (60) days notice;
(xix) terminated or amended or suffered the termination
or amendment of, or failed to perform in all material
respects all of its obligations, or suffered or permitted
any material default to exist, under, any contract, lease,
agreement or license material to the business or operations
of the Company;
(xx) lost any supplier or suppliers, which loss or
losses, individually or in the aggregate, has or may have a
material adverse effect on its results of operations;
(xxi) lost any customer or customers, which loss or
losses, individually or in the aggregate, has or may have a
material adverse effect on its results of operations;
(xxii) entered into any other transaction, contract or
commitment, except in the ordinary course of business; or
(xxiii) agreed, whether in writing or otherwise, to
take any action described in this SECTION 4.20 other than
actions expressly permitted under this SECTION 4.20.
4.21 COMPLIANCE WITH LAWS. The Company is in compliance in
all material respects with all applicable laws, ordinances,
rules, regulations and judgments, decrees and orders with which
it is or has been required to comply in connection with the
ownership of its assets and the conduct of its business. The
Company has obtained all necessary permits, licenses, or
approvals of governments, governmental authorities and quasi-
governmental authorities necessary to own its assets and to
conduct its business as presently conducted. To his or its best
knowledge, the Company is not threatened with any violation of
any statute, law, ordinance, rule, regulation or order.
4.22 RECEIVABLES AND INVENTORY.
(a) SECTION 4.22(A) of the Disclosure Schedule sets
forth a list of the accounts receivable and the accounts
payable of the Company as of the date of the Interim Balance
Sheet. All accounts receivable of the Company reflected on
the Interim Balance Sheet, and all accounts receivable
arising subsequent to the date of the Interim Balance Sheet
and on or prior to the Closing Date, have arisen in the
ordinary course of business of the Company, represent valid
obligations due the Company and are enforceable in
accordance with their terms. Subject to reserves reflected
on the Interim Balance Sheet, all such accounts receivable
have been collected or are collectible in the ordinary
course of business of the Company, without resort to legal
proceedings, in the aggregate amounts of such accounts
receivable and in accordance with their terms. The accounts
payable of the Company reflected in the Interim Balance
Sheet and all accounts payable arising after the date of the
Interim Balance Sheet and on or prior to the Closing Date
arose from bona fide transactions in the ordinary course of
business of the Company and have been paid or are not yet
due and payable.
(b) Subject to reserves for obsolescences reflected on
the Interim Balance Sheet, the inventory of the Company is
in good and merchantable condition and is suitable and
usable or salable in the ordinary course of business of the
Company for the purposes for which intended. The Company's
inventory has been reflected on the Interim Balance Sheet
and carried on the books of account of the Company on a
first-in first-out basis in accordance with GAAP,
consistently applied. Since the date of the Interim Balance
Sheet, inventories of raw materials and supplies have been
purchased by the Company in the ordinary course of business,
consistent with the current level of sales, and the volumes
of purchases thereof and orders therefor have not been
reduced or otherwise changed in anticipation of the
transactions contemplated by this Agreement. The Stockholder
is not aware of any material adverse conditions affecting
the supply of materials available to the Company and, to his
or its best knowledge, consummation of the transactions
provided for herein will not materially adversely affect
such supply.
4.23 PERSONNEL. SECTION 4.23 of the Disclosure Schedule sets
forth the names, ages and titles of all officers and employees of
the Company and the accrued vacation time of each such officer
and employee as of the most recent practicable date. The Company
is not in default with respect to any of its obligations to its
respective officers or employees.
4.24 LABOR RELATIONS. There are no controversies pending or
threatened between the Company and any of its employees, former
employees, job applicants or any association or group of such
persons, which controversies could have a material adverse impact
on the financial condition or operations of the Company, and the
Company has not taken or failed to take any action which would
provide a reasonable basis for such a controversy. The Company
has complied with all laws applicable to it relating to the
employment of labor, including any provisions thereof relating to
wages, hours, collective bargaining and the payment of social
security and similar taxes. To his or its best knowledge, there
are no current activities or proceedings of any labor union (or
representatives thereof) to organize any unorganized employees of
the Company. During the twelve-month period preceding the date of
this Agreement, there have not been any significant labor
troubles involving persons employed by the Company. To his or its
best knowledge, there are no present employees of the Company who
will not continue to be available for employment by the Company
after the Closing on substantially the same terms as presently
employed. There are no collective bargaining agreements relating
to any employees of the Company.
4.25 ENVIRONMENTAL MATTERS.
(a) For purposes of this Agreement, "Environmental
Claim" means any claim, action, cause of action,
investigation or notice (written or oral) by any person or
entity alleging potential liability (including, without
limitation, potential liability for investigatory costs,
cleanup costs, governmental response costs, natural
resources damages, property damages, personal injuries, or
penalties) arising out of, based on or resulting from (i)
the presence, or release into the environment, of any
Material of Environmental Concern at any location, whether
or not owned by the Company, or (ii) circumstances forming
the basis of any violation, or alleged violation, of any
Environmental Law. For purposes herein, "Environmental Laws"
means all federal, state, local and foreign laws and
regulations relating to pollution or protection of human
health (excluding food sanitation laws and regulations) or
the environment (including, without limitation, ambient air,
surface water, groundwater, land surface or subsurface
strata), including, without limitation, laws and regulations
relating to emissions, discharges, releases or threatened
releases of Materials of Environmental Concern, or otherwise
relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of
Materials of Environmental Concern, and "Materials of
Environmental Concern" means any chemicals, pollutants,
contaminants, wastes, toxic substances, hazardous
substances, petroleum or petroleum products.
(b) Except as set forth in SECTION 4.25 of the
Disclosure Schedule, to his or its best knowledge, the
Company is in full compliance with all applicable
Environmental Laws. Except as set forth in SECTION 4.25 of
the Disclosure Schedule, neither the Stockholder nor the
Company has received any communication (written or oral),
whether from a governmental authority, citizens group,
employee or otherwise, that alleges that the Company is not
in such full compliance, and, to his or its best knowledge,
there are no circumstances that may prevent or interfere
with such full compliance in the future. All permits and
other governmental authorizations currently held by the
Company pursuant to the Environmental Laws are identified in
SECTION 4.25 of the Disclosure Schedule.
(c) Except as set forth in SECTION 4.25 of the
Disclosure Schedule, to his or its best knowledge, there is
no Environmental Claim pending or threatened against the
Company or, to the best of the Stockholders' knowledge,
against any person or entity whose liability for any
Environmental Claim the Company has or may have retained or
assumed either contractually or by operation of law.
(d) Except as set forth in SECTION 4.25 of the
Disclosure Schedule, to his or its best knowledge, there are
no past or present actions, activities, circumstances,
conditions, events or incidents, including, without
limitation, the release, emission, discharge, presence, or
disposal of any Material of Environmental Concern, that
could form the basis of any Environmental Claim against the
Company or, to his or its best knowledge, against any person
or entity whose liability for any Environmental Claim the
Company has or may have retained or assumed either
contractually or by operation of law.
(e) Without in any way limiting the generality of the
foregoing, to his or its best knowledge, (i) all on-site and
off-site locations where the Company has stored, disposed or
arranged for the disposal of Materials of Environmental
Concern are identified in SECTION 4.25 of the Disclosure
Schedule, (ii) all underground storage tanks, and the
capacity and contents of such tanks, located on property
leased by the Company are identified in SECTION 4.25 of the
Disclosure Schedule, (iii) except as identified on SECTION
4.25 of the Disclosure Schedule, there is no asbestos
contained in or forming part of any Real Property or
Improvements, and (iv) no polychlorinated biphenyls (PCB's)
are used or stored at any Real Property.
4.26 ASSETS NECESSARY TO BUSINESS; LICENSES AND PERMITS.
(a) The Company has good, valid and marketable title to
or the right to use all equipment, properties and assets,
real, personal and mixed, tangible and intangible, necessary
for the conduct by the Company of its business as of the
date hereof, and is a party to all leases, licenses and
other agreements reasonably necessary to permit it lawfully
to carry on its business as presently or in the future
conducted.
(b) The Company has available to it sufficient power,
fuel oil, natural gas and water supplies and adequate
sewerage and waste disposal systems for the operation of its
business as presently conducted, and, to his or its best
knowledge, all such supplies and systems will be available
to the Company after the Closing.
(c) The Company has all licenses, permits, consents,
approvals, authorizations, qualifications and orders of
governmental authorities and other third parties
(collectively, "Permits") that are required to enable the
Company to conduct its business as presently conducted,
including without limitation all Permits required under the
Environmental Laws, and all such Permits are listed and
briefly described in SECTION 4.26 of the Disclosure
Schedule. No proceeding is pending or threatened to limit,
suspend or revoke any Permit, and the execution, delivery
and performance of this Agreement and the consummation of
the transactions contemplated hereby will not violate or
result in the revocation, suspension or limitation of any
Permit.
4.27 AFFILIATE AGREEMENTS; POTENTIAL CONFLICTS OF INTEREST.
(a) SECTION 4.27 of the Disclosure Schedule sets forth
each agreement, contract, commitment and understanding,
whether written or oral, between or involving the
Stockholder or any of his or its respective affiliates or
associates, on the one hand, and the Company, on the other
hand.
(b) Except as set forth in SECTION 4.27 of the
Disclosure Schedule, the Stockholder, and to his or its best
knowledge, no officer, director or affiliate of the Company
or of the Stockholders, no relative or spouse (or relative
of such spouse) of any such officer, director or affiliate,
and no entity controlled by one or more of the foregoing:
(i) owns, directly or indirectly, any interest in
(excepting less than 1% stock holdings for investment
purposes in securities of publicly held and traded
companies), or is an officer, director, employee or
consultant of, any person, firm, corporation or other
entity which is, or is engaged in business as, a
competitor, lessor, lessee, supplier, distributor,
sales agent or customer of the Company; or
(ii) has any cause of action or other claim
whatsoever against, or owes any amount to, the Company,
except for claims in the ordinary course of business
for items such as accrued vacation pay, accrued
benefits under employee benefit plans and similar
matters.
4.28 SUBSIDIARIES AND INVESTMENTS.
(a) Except as set forth in SECTION 4.28 of the
Disclosure Schedule, the Company does not own, directly or
indirectly, any capital stock of or other equity interest
in, and is not in a control position (alone or in
combination with others) with respect to, any corporation,
partnership, joint venture or other business organization or
entity, and the Company has no right to acquire by any
means, directly or indirectly, any capital stock or other
equity or similar interest in any corporation, partnership,
joint venture or other business organization or entity.
(b) Except as set forth in SECTION 4.28 of the
Disclosure Schedule, the Company is not subject to any
obligation or requirement to provide funds to, or make any
investment in (whether in the form of a loan, capital
contribution or otherwise), any corporation, partnership,
joint venture or other business organization or entity.
4.29 COMPANY PRODUCTS. There are no statements, citations or
decisions by any governmental or regulatory body specifically
stating that any product manufactured, marketed or distributed at
any time by the Company ("Company Product(s)") is defective or
unsafe or fails to meet any standards promulgated by any such
governmental or regulatory body. There have been no recalls
ordered by any such governmental or regulatory body with respect
to any Company Product. None of the Company, the Stockholder, the
Company's present insurance carriers or any of the Company's
previous insurance carriers has made any payment with respect to
a product liability claim or allegation regarding Company
Products. No product liability claims are presently pending or,
to his or its best knowledge, threatened, and the Stockholder is
not aware of any factual basis for any such claims. To his or its
best knowledge, (i) no fact exists relating to any Company
Product that may impose upon the Company a duty to recall any
Company Product or a duty to warn customers of a defect in any
Company Product, (ii) there is no latent or overt design,
manufacturing or other defect in any Company Product, and (iii)
there is no material liability for warranty claims or returns
with respect to any Company Product not fully reflected on the
Interim Balance Sheet.
4.30 DISCLOSURE. No representation or warranty to Trion
contained in this Agreement, and no statement contained in the
Disclosure Schedule or any certificate, document or instrument
delivered by the Company or the Stockholder pursuant hereto,
contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements
contained herein or therein not misleading. The Stockholder is
not aware of any fact which could, or with the passage of time
will, have a material adverse effect on the Company.
V. REPRESENTATIONS AND WARRANTIES OF TRION
Trion hereby represents and warrants to the Stockholders as
follows:
5.1 ORGANIZATION AND GOOD STANDING. Trion is a corporation
duly organized, validly existing and in good standing under the
laws of the State of Pennsylvania with full corporate power and
authority to carry on its business as it is now being conducted
and as proposed to be conducted.
5.2 AUTHORIZATION. Trion has all requisite corporate power
and authority to enter into this Agreement and the other
agreements contemplated hereby to which it is a party and to
carry out its obligations hereunder and thereunder. The execution
and delivery of this Agreement by Trion and the other agreements
contemplated hereby to be executed by Trion, and the consummation
by Trion of the transactions contemplated hereby and thereby,
have been duly authorized by Trion's Board of Directors, and no
other corporate action or proceeding on the part of Trion or any
other party is necessary for the execution or delivery of this
Agreement or such other agreements by Trion or for the
consummation by Trion of the transactions contemplated hereby or
thereby. This Agreement and the other agreements contemplated
hereby have been duly executed and delivered by Trion and
(assuming this Agreement has been duly executed and delivered by
the Company and the Stockholders) are legally valid and binding
obligations of Trion enforceable against Trion in accordance with
their respective terms except to the extent that (i) the
foregoing may be subject to bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or other similar laws now
or hereafter in effect relating to creditors' rights and (ii) the
remedy of specific performance and injunctive and other forms of
equitable relief are subject to certain equitable defenses and to
the discretion of the court before which any proceeding thereof
may be brought.
5.3 CONSENTS AND APPROVALS. The execution and delivery of
this Agreement or the other agreements contemplated hereby to be
executed by Trion and the consummation by Trion of the
transactions contemplated hereby or thereby will not, with or
without notice or passage of time, or both, (a) violate any
provision of the charter documents or by-laws of Trion, (b)
violate any law, rule, regulation, ordinance, order, writ,
injunction, judgment or decree applicable to Trion or by which
any of Trion's properties or assets are bound or affected or (c)
conflict with, or result in the breach of or termination of any
provision of, or constitute a default under, the terms,
conditions or provisions of any note, bond, mortgage, deed of
trust, indenture, permit, license, franchise agreement, lease or
other contract, instrument or obligation to which Trion is a
party or by which any of Trion's properties or assets is bound or
affected. Other than any reports required to be filed pursuant to
Section 13 or 15(d) or other applicable provisions of the
Securities Exchange Act of 1934, as amended, Trion is not
required to submit any notice, report or other filing with any
third party or any governmental or regulatory authority or
instrumentality in connection with the execution, delivery or
performance by Trion of this Agreement or by the agreements
contemplated hereby to be executed by Trion, and the consummation
of the transactions contemplated hereby and thereby, except for
the failure to submit any such notice, report or filing which
failure does not have a material adverse effect on Trion.
5.4 SECURITIES LAW REPRESENTATIONS.
(a) Trion understands that none of the Shares or
Warrants have been registered under the securities laws of
the United States or of any state, the Shares and Warrants
having been acquired by the Stockholders pursuant to
transactions exempt from the registration requirements of
federal or state securities laws, and that as such, the
Shares and Warrants are restricted securities that cannot be
resold absent registration under applicable securities laws
or an exemption from registration under such laws.
(b) Trion understands that the offering and sale of
the Shares and Warrants will not be registered under the
securities laws of the United States or of any state as part
of the sale transactions contemplated by this Agreement in
reliance on statutory exemptions from registration under
such laws. Trion believes itself to be a sophisticated
investor.
(c) Trion shall not sell, transfer or otherwise
dispose of the Shares or Warrants, absent registration under
applicable federal and/or state securities laws or absent an
exemption from registration under such laws.
(d) Trion is acquiring the shares for its own account,
for investment purposes only, and not with a view to sell,
transfer or otherwise distribute the Shares or Warrants on
behalf of the Stockholders or on behalf of the Company.
(e) Trion shall deliver to Stockholders any other
document as may be reasonably required or desired to
evidence compliance with the exemptions from registration
under the applicable securities laws, including without
limitation a certificate at Closing reconfirming the
representations and warranties made in this SECTION 5.4 in
substantially the form of EXHIBIT C attached hereto.
VI. COVENANTS OF THE PARTIES
6.1 CONDUCT OF BUSINESS. The Stockholders agree that, from
the date hereof until Closing, unless otherwise consented to by
Trion in writing, the Stockholders shall cause the Company to
conduct its business diligently and in the ordinary and usual
course with past practice, the Stockholders shall cause the
Company to use its best efforts to preserve intact its business,
operations, organization, goodwill and work force and will
conduct its business in a fiscally sound manner consistent with
the operation of its business prior to the date hereof, and the
Stockholders shall cause the Company to continue all practices,
policies, procedures and operations in substantially the same
manner as heretofore conducted. Without limiting the generality
of the foregoing, and except as otherwise expressly provided in
or contemplated by this Agreement or with the prior written
consent of Trion, from the date hereof to Closing, the Company
will not:
(a) take any action described in SECTION 4.20 hereof
other than actions expressly permitted thereby and other
than (i) the issuance by the Company of the Dempster/Leahy
Shares upon conversion by Dempster/Leahy of the Debentures,
and (ii) the issuance by the Company of the Leader Shares
upon exercise by Leader of the options contained in the
Stock Option Agreement.
(b) pay, discharge, settle, compromise or otherwise
dispose of any litigation or proceeding, pending or
otherwise involving the Company, or agree to do any of the
foregoing, except for litigation the defense of which has
been assumed by the Company's insurance carriers.
6.2 ASSURANCES; BEST EFFORTS. Each party hereto shall take
such other action from time to time as any other party may
reasonably request in order to more effectively carry out the
transactions, and, upon the terms and subject to the conditions
of this Agreement, use its reasonable best efforts to take, or
cause to be taken, all actions, and do, or cause to be done, all
things necessary, proper or advisable, under applicable laws,
regulations or otherwise to consummate the transactions
contemplated hereby.
6.3 OTHER OBLIGATIONS OF THE STOCKHOLDERS PENDING THE
CLOSING. The Stockholders agree that from the date hereof until
the Closing, unless otherwise consented to by Trion in writing:
(a) ACCESS. The Stockholders will permit and will cause
the Company to permit Trion and its representatives,
counsel, accountants and advisers full access, during normal
business hours, throughout the period prior to the Closing
to all of the property, books, contracts, commitments and
records of the Company and will furnish Trion and its
representatives during such period with all information
concerning the business of the Company and its operations,
assets, liabilities and prospects as Trion or its
representatives may request. The Stockholders will take and
will cause the Company to take action so as to authorize
Trion's accountants access to the work papers and other
documents used or relied on by the Stockholders' or the
Company's, as the case may be, accountants in preparing the
financial statements contemplated by this Agreement. Pending
the Closing, Trion agrees to keep all such information
confidential. All of the books and records of the Company
(including, without limitation, correspondence, memoranda,
books of account, personnel and payroll records) are and
will at the Closing be located on the premises of the
Company.
(b) OTHER TRANSACTIONS. Unless and until this Agreement
is terminated pursuant to SECTION 10.1 hereof, the
Stockholders will not, and the Stockholders will cause the
Company and the directors, officers, employees, agents and
affiliates of the Company not to, directly or indirectly,
solicit, initiate, facilitate (including furnishing any
information to any third party or group) or entertain the
submission of proposals or offers from, or solicit,
encourage, entertain or enter into any agreement,
arrangement or understanding with, or engage in any
discussions or negotiations with, or furnish any information
to, any person or entity, other than Trion or a
representative thereof, with respect to the acquisition of
all or any part of the Company, or its business. Should the
Stockholders or the Company or any of their respective
affiliates or representatives, during such period, receive
any offer or inquiry relating to such a transaction, or
obtain information that such an offer is likely to be made,
the Stockholders will provide Trion with immediate notice
thereof, which notice will include the identity of the
prospective offeror.
(c) INSURANCE. The Stockholders will cause the Company
to maintain the insurance coverage specified in SECTION 4.13
of the Disclosure Schedule, or policies providing
substantially equivalent coverage, in full force and effect,
and will timely pay all premiums payable with respect
thereto.
(d) CONSENTS. The Stockholders will obtain, and cause
the Company to obtain, in writing, prior to the Closing, all
consents, approvals, authorizations and orders necessary for
(i) the authorization, execution, delivery and performance
by the Stockholders of this Agreement, (ii) the
authorization, execution, delivery and performance by the
Company of this Agreement, and (iii) the authorization,
execution, delivery and performance of all other agreements,
documents and instruments required to be executed and
delivered by the Stockholders and/or the Company to
consummate the transactions contemplated hereby or thereby.
Without the prior written consent of Trion, the costs and
expenses incurred or to be incurred in obtaining any such
consents, approvals, authorizations or orders shall not be
charged to or otherwise payable by the Company in any case
in which the costs or expenses are not capable of being
currently expensed by the Company. None of the Stockholders
or any person attempting to obtain such consent, approval,
authorization or order shall agree to amend any contract,
agreement or understanding between the Company and any
person, whether written or oral, in order to obtain such
consent, approval, authorization or order. Copies thereof
shall be delivered by the Stockholders and/or the Company to
Trion promptly after the receipt thereof but in no event
later than the last business day prior to the Closing.
(e) SUPPLEMENTAL DISCLOSURE. The Stockholder shall be
permitted to, and agrees to, promptly supplement the
Disclosure Schedule with respect to any matter hereafter
arising or discovered which, if existing or known at the
date of this Agreement, would have been required to be set
forth or described therein. To be effective to supplement
the Disclosure Schedule the following provisions shall
apply: (i) the Stockholders shall deliver written notice of
such supplement to Trion; (ii) Trion shall thereafter have a
period of ten (10) days following delivery of such
supplement to either accept such supplement by delivery of
written acceptance to Seller's Agent or terminate this
Agreement pursuant to Article X; and (iii) if such
supplement is accepted the representations and warranties to
which such supplement relates shall be deemed amended to
reflect such supplement. Other than as permitted by this
Section 6.3(e), no change shall be made to the Disclosure
Schedule after the date hereof.
6.4 CERTAIN TAX MATTERS.
(a) The Stockholders shall pay all sales, use,
transfer, real property transfer, recording, gains, stock
transfer and other similar taxes and fees (collectively,
the "Transfer Taxes") arising out of or in connection with
the transactions effected pursuant to this Agreement. The
Stockholders shall file all necessary documentation and
Returns with respect to such Transfer Taxes.
(b) After consultation with and due consideration of
the viewpoints of the Stockholders as expressed by the
Stockholders' Tax Agent (as hereinafter defined), Trion
shall have the right to control any audit or examination by
any taxing authority, initiate any claim for refund, file
any amended return, contest, resolve and defend against any
assessment, notice of deficiency or other adjustment or
proposed adjustment relating or with respect to any Taxes of
the Company for all taxable periods ending prior to or
including the Closing Date. The Stockholders' Tax Agent
shall be David M. Schlegel and a representative designated
by the Allied Companies.
6.5 PUBLIC ANNOUNCEMENTS. Trion and the Stockholders agree
that prior to the Closing they will consult with each other, and
at all times after the Closing the Stockholders will consult with
Trion, before issuing any press releases or otherwise making any
public statements with respect to this Agreement or the
transactions contemplated hereby and shall not issue any press
release or make any public statement prior to such consultation
and the approval of the other party, except as may be required by
law.
6.6 EXPENSES. Each party to this Agreement shall bear all
fees and expenses incurred by it in connection with the
negotiation, preparation, execution, delivery and performance of
this Agreement and the consummation of the transactions
contemplated hereby, including, without limitation, all fees and
expenses of agents, representatives, counsel, accountants and
brokers and the costs, if any, of obtaining any required consents
or approvals.
6.7 INDEMNIFICATION OF BROKERAGE. Each Stockholder
represents and warrants to Trion that no broker, finder, agent
or similar intermediary has acted on behalf of the Company or the
Stockholder in connection with this Agreement or the transactions
provided for herein, and that there are no brokerage commissions,
finder's fees or similar fees or commissions payable with respect
to this Agreement or such transactions based on any agreement,
arrangement or understanding with the Company or the Stockholder,
or any action taken by the Company or the Stockholder. Each of
the Stockholders agrees to the maximum extent of the amount set
forth in EXHIBIT D for such Stockholders as the Maximum Pro Rata
Indemnification Amount for such Stockholder to indemnify and hold
Trion harmless from any claim or demand for commission or other
compensation by any broker, finder, agent or similar intermediary
claiming to have been employed by or on behalf of the Company or
the Stockholders, and to bear the cost of legal expenses incurred
in defending against any such claim. Trion represents and
warrants to the Stockholders that there are no brokerage
commissions, finder's fees or similar fees or commissions payable
in connection with this Agreement or the transactions provided
for herein based on any agreement, arrangement or understanding
with Trion, or any action taken by Trion, other than owed by
Trion to Harris Williams & Co. Trion agrees to indemnify and hold
the Stockholders harmless from any claim or demand for commission
or other compensation by any broker, finder, agent or similar
intermediary claiming to have been employed by or on behalf of
Trion and to bear the cost of legal expenses incurred in
defending against any such claim.
6.8 ENVIRONMENTAL AUDIT. Trion will perform at its expense,
prior to the Closing Date, an environmental audit of all property
occupied by the Company or as to which the Company has potential
liability. If the results of such audit shall not be satisfactory
to Trion, it shall immediately notify the Stockholders and the
Company. The Stockholders and/or the Company shall have a period
of fifteen (15) days after such notification to correct any
defects revealed by such audit which are not satisfactory to
Trion. In the event of failure to correct such defects
satisfactory to Trion, Trion may terminate this Agreement
pursuant to ARTICLE X or accept the results of such audit in
which case the provisions of SECTION 4.25 shall be deemed amended
to reflect the results of such audit.
6.9 MEDICAL BENEFITS. Trion will cause the Company to
continue to afford the employees of the Company with health and
hospitalization coverage substantially equivalent to that
afforded them at the Closing Date.
VII. CONDITIONS TO OBLIGATIONS OF TRION
The obligations of Trion hereunder are subject to the
fulfillment, prior to or at the Closing, of each of the following
conditions (all or any of which may be waived in whole or in part
by Trion):
7.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by the Company and the Stockholders in this
Agreement and in the Disclosure Schedule, or in any other
agreement, instrument or certificate delivered by the Company or
the Stockholders pursuant to this Agreement, shall be true as of
the date hereof and the Closing Date.
7.2 PERFORMANCE. The Company and the Stockholders shall
have performed and complied, in all material respects, with all
agreements, covenants, obligations and conditions required by
this Agreement to be so performed or complied with by them prior
to or at the Closing.
7.3 STOCKHOLDERS' CERTIFICATE. Each Stockholder shall have
delivered to Trion a certificate, signed by the Company and the
Stockholders, dated the Closing Date, certifying the fulfillment
of the conditions set forth in SECTION 7.1 and SECTION 7.2
hereof.
7.4 OPINION OF COUNSEL TO THE STOCKHOLDERS. Trion shall
have received an opinion of Kelly, Rammelkamp, Muehlenweg &
Lucero, P.A., counsel to the Stockholders, in form and substance
satisfactory to Trion, dated as of the Closing Date.
7.5 DOCUMENTS. All documents, agreements or instruments to
be delivered by the Company or the Stockholders to Trion at the
Closing, as set forth in SECTION 3.1 hereof or otherwise, shall
have been delivered and shall be in form and substance
satisfactory to Trion.
7.6 THIRD PARTY CONSENTS. Trion shall have received copies
of all consents, approvals, authorizations and orders necessary
for the Stockholders or the Company to consummate the
transactions contemplated hereby, all of which shall be in form
and substance satisfactory to Trion and shall continue to be in
full force and effect after the Closing Date.
7.7 NO INJUNCTION. There shall not be in effect on the
Closing Date any judgment, order, injunction or decree of any
court enjoining consummation of any of the transactions
contemplated by this Agreement.
7.8 NO GOVERNMENT PROCEEDING OR LITIGATION. There shall not
be threatened, instituted or pending any suit, action,
investigation, inquiry or other proceeding by or before any
governmental or other regulatory or administrative agency or
commission which in the reasonable judgment of Trion may have a
material adverse effect on the financial condition or results of
operations of the Company.
7.9 NO MATERIAL ADVERSE CHANGE. The Company shall not have
suffered any material adverse change in its financial condition,
business or operations since the date of the 1995 Balance Sheet.
7.10 FIRPTA CERTIFICATE. If applicable, each Stockholder
shall have delivered to Trion a non-foreign person affidavit, as
required by Section 1445 of the Code.
7.11 RESIGNATIONS. The Stockholders shall have delivered to
Trion the written and manually signed resignations of and
releases from all officers and directors of the Company.
7.12 RELEASES. The Company shall have been released from (i)
all indebtedness or obligations for Funded Indebtedness to be
fully paid at Closing and (ii) all liens and security interests
to which its assets may be subject, including those liens and
security interests referred to in Sections 4.8(i) and (ii), and
shall have provided satisfactory evidence of such releases as
provided in SECTION 1.3(B) hereof.
7.13 TERMINATION OF AGREEMENTS. The Stock Restriction
Agreements, between the Company and each of the Current
Stockholders, the Allied Investment Agreement and the
Dempster/Leahy Debentures shall each have been declared fully
performed and/or terminated and be of no further force or effect,
and the Stockholders shall have provided satisfactory evidence of
such terminations.
7.14 BOARD OF DIRECTOR'S APPROVAL. The Board of Directors of
Trion shall have approved this Agreement and the completion of
the transactions contemplated by this Agreement.
7.15 FINANCING. Trion shall have secured bank financing
which will provide sufficient funds to complete the transactions
contemplated hereby on terms and conditions satisfactory to
Trion.
VIII. CONDITIONS TO OBLIGATIONS OF THE STOCKHOLDERS
The obligations of the Stockholders hereunder are subject to
the fulfillment, prior to or at the Closing, of each of the
following conditions (all or any of which may be waived in whole
or in part by the Stockholders):
8.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by Trion in this Agreement shall be true, in all
material respects, when made and at and as of the Closing Date as
though such representations and warranties were made at and as of
such date.
8.2 PERFORMANCE. Trion shall have performed and complied,
in all material respects, with all agreements, covenants,
obligations and conditions required by this Agreement to be so
performed or complied with by it prior to or at the Closing.
8.3 OFFICER'S CERTIFICATE. Trion shall have delivered to
the Stockholders a certificate, dated the Closing Date and
executed by its President, certifying as to the fulfillment of
the conditions set forth in SECTION 8.1 and SECTION 8.2 hereof.
8.4 NO INJUNCTION. There shall not be in effect on the
Closing Date any judgment, order, injunction or decree of any
court enjoining consummation of the transactions contemplated by
this Agreement.
IX. SURVIVAL OF REPRESENTATIONS;
INDEMNIFICATION/PURCHASE PRICE ADJUSTMENT
9.1 SURVIVAL OF REPRESENTATIONS. All representations,
warranties and covenants made by any party in this Agreement
shall be deemed to have been made or given, as the case may be,
as of the date hereof and as of the Closing Date and, except as
set forth below, shall survive the Closing and any investigation
at any time made by or on behalf of any party until the last day
of the twenty-fourth (24th) month following the month in which
the Closing Date occurs; PROVIDED, HOWEVER, (i) the
representations, warranties and covenants of the Stockholders set
forth in SECTION 4.11, SECTION 4.12 and SECTION 6.4(A) hereof
shall survive the Closing until the earlier of (A) the last day
of the forty-eighth (48th) month following the month in which the
Closing Date occurs or (B) the expiration of the applicable
statute of limitations; (ii) the representations and warranties
of the Stockholders contained in SECTION 4.1, SECTION 4.2 and
SECTION 4.3 shall continue after the Closing without limitation
pursuant to this Agreement as to time; and (iii) the
representations and warranties of the Stockholders contained in
SECTIONS 4.25 AND 4.29 shall survive the Closing and any
investigations at any time made by or on behalf of any party
until the last day of the thirty-sixth (36th) month following the
month in which the Closing Date occurs.
9.2 STATEMENTS AS REPRESENTATIONS. All statements contained
in this Agreement, the Disclosure Schedule, or any other
agreement, instrument or certificate delivered pursuant hereto
shall be deemed representations and warranties for all purposes
of this Agreement, including, without limitation, the references
to representations and warranties in ARTICLE IV and ARTICLE V
hereof.
9.3 INDEMNIFICATION BY STOCKHOLDERS; REDUCTION OF PURCHASE
PRICE.
(a) Upon the terms and subject to the conditions of
this ARTICLE IX, each of the Stockholders hereby agrees to
indemnify, defend, reimburse and hold harmless Trion and its
subsidiaries, affiliates and parent corporations, and each
officer and director of Trion or of any of its subsidiaries,
affiliates or parent corporations, and each affiliate
thereof (collectively, the "Trion Group"), and their
successors and assigns, from and against, all Damages (as
defined in SECTION 9.3(B) hereof), incurred, asserted
against, resulting to, imposed upon or incurred by any
member of the Trion Group, directly or indirectly, by reason
of or resulting from (i) any misrepresentation or breach of
any representation, warranty or agreement of the
Stockholders or the Company contained in or made pursuant to
this Agreement or (ii) claims, actions, suits, proceedings
or investigations relating to transfers of the Shares prior
to the Closing, regardless of when such claims, actions,
suits, proceedings or investigations are made or commenced,
including, without limitation, the claims, actions, events,
circumstances, conditions, suits and proceedings set forth
in a Disclosure Schedule, PROVIDED that (x) no Damages shall
be collectible under this SECTION 9.3(A) unless the
aggregate amount of Damages with respect to all matters
referred to in this SECTION 9.3(A) (determined without
regard to any materiality qualification contained in any
representations, warranty or covenant giving rise to the
claim for indemnity hereunder) exceeds $50,000 in which case
the entire amount of Damages shall be subject to recovery
and (y) the Stockholders' aggregate maximum liability under
this SECTION 9.3(A) shall not exceed $3,000,000. The matters
contemplated by clauses (i) and (ii) above are hereinafter
referred to individually as a "Claim" and collectively as
"Claims." It is agreed that the indemnification accorded to
the Trion Group shall include Damages directly incurred by
the Trion Group as well as Damages incurred as a result of
Third Party Claims (hereinafter defined).
(b) The term "Damages" shall mean and include any
demands, claims, actions or causes of action, assessments,
any present or future direct or indirect indebtedness,
liability, settlement, judgment or judicial compromise
(whether voluntary or involuntary), loss, damage, interest,
penalty, deficiency, obligation or responsibility, whether
known or unknown, fixed or unfixed, conditional or
unconditional, choate or inchoate, liquidated or
unliquidated, secured or unsecured, accrued, absolute,
contingent or otherwise (including, without limitation,
costs and reasonable fees and expenses of counsel or
consultants), net of any (i) actual tax benefits to the
Company and (ii) insurance reimbursements or payments
received by the Company in respect thereof provided that
prior to exercising any rights of indemnification Trion or
any member of Trion Group may have against the Stockholders,
Trion shall use all reasonable, best efforts to obtain
available insurance reimbursements or payments. To the
extent permitted by law and as long as no insurance coverage
for the benefit of Trion or any member of the Trion Group is
adversely affected, Trion waives all rights of subrogation
with respect to such insurance reimbursements or payments.
Trion shall not be required to pursue litigation against any
insurance carrier prior to seeking indemnification
hereunder.
(c) The indemnification obligations of the
Stockholders under this SECTION 9.3 are subject to the
following:
(i) all indemnifiable Damages shall first be paid
by the set-off by Trion of amounts owed under the Note
as provided in SECTION 9.4 hereof as long as any
amounts are owed by Trion under the Note;
(ii) after no amounts are owed by Trion under the
Note, indemnifiable Damages shall be collectible by
Trion from each and every Stockholder individually and
as a group and regardless of whether or not the
particular Stockholder against whom indemnification is
sought was responsible for the breach of the
representation, warranty or covenant or other event
giving rise to Damages; PROVIDED THAT the maximum
amount which shall be collectible against any
particular Stockholder shall not exceed the amount
shown as the Maximum Pro Rata Indemnification Amount
for such Stockholder on EXHIBIT D (the "Maximum
Amount");
(iii) payments made in respect of Damages shall be
deemed a reduction and further adjustment in the
Purchase Price payable to such Stockholder;
(iv) any claims or potential claims for Damages
must be asserted by institution of an action against
the Stockholders against whom Claims are available
(except that in the case of a Claim in respect of a
breach of Sections 4.11, 4.12 or 6.4(a) the claims or
potential claims may be asserted by a written letter
giving notice of such Claim to the Stockholders and an
action instituted within 60 days following the date the
amount of Damages are liquidated) on or before the
Limitations Date (as defined in (d) below), and upon
such assertion or notice the right to indemnification
shall be preserved with respect to those Claims beyond
the Limitations Date;
(v) any claims for Damages other than by set-off
under the Note shall be claimed, asserted or prosecuted
against all of the Stockholders up to each
Stockholder's Maximum Amount;
(vi) the party seeking indemnification may in good
faith and with prior notice to other Stockholders
settle or compromise with any Stockholder any claims
for indemnification at any time; provided such
settlement or compromise shall not by its terms purport
to materially adversely affect the respective
Stockholder's rights to contribution from other
Stockholders;
(vii) in connection with any action by Trion for
Damages, each of the Stockholders has consented to
jurisdiction and venue as provided in SECTION 11.11
hereof.
(d) The term "Limitations Date" shall mean as to any
Claim that date which is thirty (30) days following the end
of the period provided for the survival of the Stockholders'
respective representations, warranties and covenants set
forth in SECTION 9.1 hereof.
9.4 SET-OFF OF NOTE. Upon each determination of Damages for
which Trion shall be entitled to indemnification pursuant to
SECTION 9.3 hereof by set-off against the Note, Trion may set off
under the Note an amount equal to such Damages, without taking
any other action against any other person. Any such action shall
not limit the rights of Trion to recourse against the
Stockholders for indemnification pursuant to the terms hereof.
In case of any set-off under the Note, each Stockholder's Maximum
Amount shall be reduced by the product of (A) the amount set-off
and (B) the Pro Rata Indemnification Percentage for such
Stockholder shown on EXHIBIT D. All amounts owing under the Note
as to which Trion has not asserted a claim which remains
outstanding under the Note on the last day of the twenty-four
(24) month following the month in which the Closing Date occurs
shall be paid to the Stockholders as provided in the Note.
9.5 CONDITIONS OF INDEMNIFICATION REGARDING THIRD PARTY
CLAIMS. Any member of the Trion Group against whom a claim is
asserted by a third party (a "Third Party Claim") shall give the
Stockholders prompt notice of any such Third Party Claim, and,
except as otherwise provided herein, the Stockholders and Trion
will jointly undertake the defense thereof with mutually agreed
upon counsel, with the costs and expenses of such defense to be
advanced by Trion and reimbursed by the Stockholders upon Trion's
periodic demands; PROVIDED, HOWEVER, that the Stockholders shall
not finally settle, compromise or resolve any Third Party Claim
without the prior consent of Trion, which consent shall not be
unreasonably withheld. Failure to give prompt notice hereunder
shall not affect the Stockholders' obligations hereunder unless
such failure materially prejudices the Stockholders, including
without limitation prejudice to Stockholders' ability to defend
against such Third Party Claim.
9.6 INDEMNIFICATION BY TRION. Trion agrees to indemnify,
defend and hold harmless the Stockholders from and against any
Damages based upon, arising out of or otherwise in respect of any
inaccuracy in or any breach of any representation, warranty,
covenant or agreement of Trion contained in this Agreement or in
any agreement, certificate, document or other instrument
delivered by Trion pursuant to this Agreement. It is agreed that
the indemnification accorded to the Stockholders shall include
Damages directly incurred by the Stockholders as well as Damages
incurred as a result of third party claims.
9.7 INVESTIGATIONS. The respective representations and
warranties of the Company, the Stockholders and Trion contained
herein or in any certificates, opinions or other documents
delivered pursuant to this Agreement shall not be deemed waived
or otherwise affected by any investigation or examination of the
Company, the business or operations of the Company or the books
and records of the Company by Trion or its employees, agents or
representatives.
9.8 REMEDIES. Except as otherwise provided herein, the
remedies provided herein shall be cumulative and are in addition
to, and not in derogation of, any statutory, equitable or common
law remedy either party may have, and shall not preclude the
assertion by Trion or any member of the Trion Group of any other
right or seeking of any other remedies against any Stockholder;
provided such other rights or remedies are asserted by an action
commenced prior to the last day of the twenty-fourth (24th) month
following the month on which the Closing Date occurs; provided
further, however, except in the case of wilful fraud on the part
of a Stockholder or equitable remedies available against a
Stockholder, no Stockholder shall have any monetary liability to
Trion or any member of the Trion Group in excess of the Maximum
Amount for such Stockholder.
9.9 WAIVER OF CLAIMS AGAINST COMPANY. Each of the
Stockholders hereby agrees that he or it will not make a claim
for indemnification or contribution against the Company by reason
of the fact that he or it was a director, officer, employee, or
agent of the Company or was serving at the request of the Company
as a partner, trustee, director, officer, employee, or agent of
another entity (whether such claim is for judgments, damages,
penalties, fines, costs, amounts paid in settlement, losses,
expenses, or otherwise and whether such claim is pursuant to any
statute, charter document, bylaw, agreement, or otherwise) with
respect to any action, suit, proceeding, complaint, claim, or
demand brought by any member of the Trion Group against such
Stockholder (whether such action, suit, proceeding, complaint,
claim, or demand is pursuant to this Agreement, applicable law,
or otherwise).
X. TERMINATION; AMENDMENT AND WAIVER
10.1 TERMINATION OF AGREEMENT. This Agreement may be
terminated at any time prior to the Closing:
(a) by mutual written agreement of each of the
Stockholders and Trion;
(b) by Trion, if the conditions of ARTICLE VII are not
satisfied by the Closing Date or if any of the Stockholders
or the Company default in the performance of any covenant
contained herein to be performed by it; or
(c) by the Stockholders, if the conditions of ARTICLE
VIII are not satisfied by the Closing Date or if Trion
defaults in the performance of any covenant contained herein
to be performed by it.
10.2 EFFECT OF TERMINATION. In the event of termination of
this Agreement as provided herein other than (i) the termination
by Trion for failure of the Stockholders or the Company to
satisfy any condition set forth in SECTIONS 7.1 through 7.6 or
7.9 through 7.13, or (ii) the termination by the Stockholders for
failure of Trion to satisfy any of the conditions set forth in
SECTIONS 8.1 through 8.3, this Agreement shall forthwith become
void and there shall be no liability on the part of any party
hereto (or any of their respective officers or directors),
provided that the provisions of SECTION 6.6 and SECTION 10.3 will
survive any such termination.
10.3 POST-TERMINATION OBLIGATIONS. In the event the
Agreement is terminated in accordance with the provisions of
SECTION 10.1 or otherwise, the parties hereby agree as follows:
(a) Immediately upon termination Trion shall return to
the Company (or provide a certification as to destruction),
and the Company and the Stockholders shall return to Trion
(or provide a certification as to destruction), all
Confidential Information previously delivered or disclosed
by the Company (or its authorized representatives or agents)
to Trion or by Trion (or its authorized representatives or
agents) to the Company and/or the Stockholders pursuant to
this Agreement or otherwise. For purposes of this SECTION
10.1 "Confidential Information" shall mean (i) the originals
and all copies of all financial and other data, reports,
interpretations, forecasts and records, containing or
otherwise reflecting information and concerning the Company
or Trion, which is not available to the general public
and/or which is proprietary; and (ii) any and all analyses,
compilations, studies or other documents prepared by a party
which contain or otherwise reflect such information received
from another party (the latter being the "Confidential
Analyses"). Each party shall confirm to the other in
writing that the Confidential Analyses, if not returned to
the other party, have been destroyed.
(b) After termination, neither Trion nor the Company
and the Stockholders shall, except to the extent required by
law, (i) disclose either the fact or the terms of this
Agreement (except to the extent of any such disclosure made
prior to termination), or (ii) disclose or discuss the
reason(s) for the termination, or (iii) disclose or use the
other's Confidential Information for any purpose or in any
manner whatsoever after termination.
(c) In the event that any party is requested, directed
or otherwise required to disclose any Confidential
Information, such party will provide written notice to the
other party from whom such Confidential Information was
obtained so that such party may seek a protective order or
waive compliance with the provisions of this SECTION 10.3.
If such protective order or waiver is not obtained, the
party from whom disclosure is requested, directed or
required shall disclose only that portion of the
Confidential Information which legal counsel for such party
deems required to be disclosed. Further, in the event of
any such disclosure, the disclosing party shall use its best
efforts to obtain reliable assurance that confidential
treatment will be accorded any Confidential Information
disclosed.
(d) In the event of a breach of any provision of this
SECTION 10.3, the parties acknowledge and agree that money
damages would not be a sufficient remedy for any breach of
this provision, and that in addition to any remedies that
any party may have, a party shall be entitled to specific
performance, injunctive and/or other equitable relief and to
recover such party's costs of enforcement, including
reasonable attorneys' fees.
10.4 AMENDMENT, EXTENSION AND WAIVER. The Company, the
Stockholders and Trion may amend this Agreement at any time by an
instrument in writing signed on behalf of such parties. Any
agreement on the part of a party hereto to any waiver of
compliance with any of the agreements or conditions contained
herein shall be valid only if set forth in an instrument in
writing signed on behalf of such party. No waiver by any party of
any default, misrepresentation, or breach of warranty or covenant
hereunder, whether intentional or not, shall be deemed to extend
to any prior or subsequent default, misrepresentation, or breach
of warranty or covenants hereunder or affect in any way any
rights arising by virtue of any prior or subsequent such
occurrence.
XI. MISCELLANEOUS
11.1 BEST KNOWLEDGE. When used in this Agreement, "best
knowledge" of a person means that such person has made or caused
to be made all reasonable, relevant inquiries or investigations
or taken all such other action as is appropriate under the
circumstances.
11.2 PARTIES IN INTEREST. This Agreement and the agreements
contemplated hereby will be binding upon, inure to the benefit
of, and be enforceable by, the respective heirs, administrators,
successors and permitted assigns of the parties hereto and
thereto, including, without limitation, Trion Group; PROVIDED,
HOWEVER, that nothing contained herein shall vest any rights upon
any person other than the parties hereto and their respective
successors and permitted assigns. This Agreement may not be
assigned by Trion, the Company or the Stockholders, without the
prior written consent of the other parties.
11.3 ENTIRE AGREEMENT. This Agreement, the Disclosure
Schedule and the other agreements, instruments and writings
referred to herein or therein or delivered pursuant hereto or
thereto contain the entire understanding of the parties with
respect to the subject matter contained herein or therein. This
Agreement and the agreements contemplated hereby supersede all
prior agreements, promises, covenants, arrangements,
communications, representations and warranties and
understandings, whether oral or written, between the parties
hereto or by any officer, employee or representative of any party
hereto with respect to their respective subject matters.
11.4 HEADINGS. The Article and Section headings contained in
this Agreement are for reference purposes only and will not
affect in any way the meaning or interpretation of this
Agreement.
11.5 NOTICES. All notices, claims, certificates, requests,
demands and other communications hereunder will be in writing and
will be deemed to have been duly given if delivered personally,
mailed (registered or certified mail, postage prepaid, return
receipt requested) or recognized next business day delivery
service as follows:
(a) If to the Company, to:
Envirco Corporation
6701 Jefferson, N.E.
Albuquerque, New Mexico 87109
with a copy to:
Henry A. Kelly, Esq.
Kelly, Rammelkamp, Muehlenweg & Lucero, P.A.
Prior to 8/1/95:
400 Gold Avenue, SW, Suite 500
Albuquerque, New Mexico 87102
After 7/31/95:
320 Gold Avenue, SW, Suite 600
Albuquerque, New Mexico 87102
P.O. Box 25127
Albuquerque, New Mexico 87125-5127
(b) If to the Stockholders, to Seller's Agent at:
Mr. David M. Schlegel
6701 Jefferson, N.E.
Albuquerque, New Mexico 87109
(c) If to Trion, to:
Trion, Inc.
101 McNeill Road
Sanford, North Carolina 27331
Attention: Steven L. Schneider
with a copy to:
J. Richard Hazlett, Esq.
Smith Helms Mulliss & Moore, L.L.P.
Post Office Box 31247
Charlotte, North Carolina 28231
or to such other address as the person to whom notice is to be
given may have previously furnished to the other in writing in
the manner set forth above.
11.6 GOVERNING LAW. This Agreement will be governed by, and
construed and enforced in accordance with, the laws of the State
of North Carolina, without regard to its conflict of law rules,
and applicable federal law.
11.7 COUNTERPARTS. This Agreement may be executed
simultaneously in one or more counterparts, each of which will be
deemed an original, but all of which taken together will
constitute one and the same instrument.
11.8 SEVERABILITY. Any term or provision of this Agreement
that is invalid or unenforceable in any situations in any
jurisdiction shall not affect the validity or enforceability of
the remaining terms and provisions hereof provided that such
remaining terms and provisions can reasonably be given effect, or
the validity or enforceability of the offending term or provision
in any other situation or in any other jurisdiction. If the final
judgment of a court of competent jurisdiction declares that any
term or provision hereof is invalid or unenforceable, the parties
agree that the court making the determination of invalidity or
unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific
words or phrases, or to replace any invalid or unenforceable
terms or provision with a term or provision that is valid and
enforceable in accordance with its terms and that comes closest
to expressing the intention of the invalid or unenforceable term
or provision, and this Agreement shall be enforceable in
accordance with its terms as so modified after the expiration of
the time within which the judgment may be appealed provided that
such remaining terms and provisions can reasonably be given.
11.9 FURTHER ASSURANCES. From time to time, as and when
reasonably requested by any party hereto after the Closing, the
other parties will (at the expense of the requesting party)
execute and deliver, or cause to be executed and delivered, all
such documents, instruments and consents and will use reasonable
efforts to take all such action as may be reasonably necessary to
carry out the intent and purposes of this Agreement.
11.10 SPECIFIC PERFORMANCE. Each of the parties acknowledges
and agrees that the other parties would be damaged irreparably in
the event any of the provisions of this Agreement are not
performed in accordance with their specific terms or otherwise
are breached. Accordingly, each of the parties agrees that the
other parties shall be entitled to any injunction or injunctions
to prevent breaches of the provisions of this Agreement and to
enforce specifically this Agreement and the terms and provisions
hereof. This remedy shall be in addition to, and not in
substitution of, other remedies available to the injured party.
11.11 CONSENT TO JURISDICTION. (a) Each party hereto hereby
irrevocably submits to the jurisdiction of any North Carolina or
New Mexico State or Federal court in any action or proceeding
arising out of or relating to this Agreement, and hereby
irrevocably agrees that all claims in respect of such action or
proceeding may be heard and determined in such State court or in
such Federal court. Each party hereto hereby irrevocably waives,
to the fullest extent it may effectively do so, the defense of an
inconvenient forum to the maintenance of such action or
proceeding. Each party hereto irrevocably consents to the
service of copies of the summons and complaint and any other
process which may be served in any such action or proceeding by
the mailing of copies of such process (i) to the Stockholder at
its address specified on EXHIBIT E and (ii) to Trion or the
Company at its address set forth in Section 11.5. Each party
hereto agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner
provided by law.
(b) Nothing in this Section shall affect the right of any
party to serve legal process in any other manner permitted by law
or affect the right of any party to bring any action or
proceeding against any other party or his or its property in the
courts of other jurisdictions.
IN WITNESS WHEREOF, this Agreement has been duly executed
and delivered by the duly authorized officers of Trion and of the
Allied Companies and by the Stockholders as of the date first
above written.
TRION:
TRION, INC.
By: /s/ STEVEN L. SCHNEIDER
________________________________
Name: Steven L. Schneider
Title: President
COMPANY:
ENVIRCO CORPORATION
By: /s/ DAVID M. SCHLEGEL
________________________________
Name: David M. Schlegel
Title: President
ALLIED INVESTMENT CORPORATION
By: /s/ ERIK A. SCOTT
________________________________
Name: Erik A. Scott
Title: Vice President
ALLIED INVESTMENT CORPORATION II
By: /s/ ERIK A. SCOTT
________________________________
Name: Erik A. Scott
Title: Vice President
/s/ DAVID M. SCHLEGEL
_____________________________(SEAL)
David M. Schlegel
/s/ ELMER A. ERICKSON
_____________________________(SEAL)
Elmer A. Erickson
/s/ RICHARD H. MARMON
_____________________________(SEAL)
Richard H. Marmon
/s/ JUDITH M. SUCHOMSKI,
Personal Representative of
_____________________________(SEAL)
Estate of Robert S. Suchomski
/s/ ARTHUR D. CLINE
_____________________________(SEAL)
Arthur D. Cline
/s/ JOHN P. CUMMINGS
_____________________________(SEAL)
John P. Cummings
/s/ JIMMY E. ROYBAL
_____________________________(SEAL)
Jimmy E. Roybal
/s/ RICHARD V. DEMPSTER
_____________________________(SEAL)
Richard V. Dempster
/s/ JOHN I. LEAHY
_____________________________(SEAL)
John I. Leahy
/s/ WILLIAM J. LEADER
_____________________________(SEAL)
William J. Leader
JOHNS HOPKINS UNIVERSITY
By: /s/ WILLIAM E. SNOW, JR.
_____________________________
Name: William E. Snow, Jr.
Title: Treasurer<PAGE>
EXHIBIT A
ENVIRCO CORPORATION TOTAL OUTSTANDING SHARES
(as of Closing Date)
INITIAL DILUTION ALLIED
SHAREHOLDERS SHARES % ISSUANCE WARRANTS
1 David M. Schlegel 77,800.0 40.00% 3,890.0
2 Allied Investment
Corporation I and II 69,862.5
3 Elmer A. Erickson 29,175.0 15.00%
4 Richard H. Marmon 29,175.0 15.00%
5 Estate of Robert
S. Suchomski 14,587.5 7.50%
6 Arthur D. Cline 14,587.5 7.50%
7 John P. Cummings 14,587.5 7.50%
8 Jimmy E. Roybal 14,587.5 7.50%
9 Richard Dempster 14,587.5 4.91%
10 John Leahy
11 Johns Hopkins
University 3,969.0
12 WILLIAM LEADER 4,000.0
TOTAL 194,500.0 100.00% 11,859.0 69,862.5
<PAGE>
DEMPSTER/
LEAHY FINAL
SHAREHOLDERS CONVERSION SHARES %
1 David M. Schlegel 81,690.0 27.50%
2 Allied Investment 69,862.5 23.52%
Corporation I and II
3 Elmer A. Erickson 29,175.0 9.82%
4 Richard H. Marmon 29,175.0 9.82%
5 Estate of Robert 14,587.5 4.91%
S. Suchomski
6 Arthur D. Cline 14,587.5 4.91%
7 John P. Cummings 14,587.5 4.91%
8 Jimmy E. Roybal 14,587.5 4.91%
9 Richard Dempster 10,395.5 10,395.5 3.50%
10 John Leahy 10,395.5 10,395.5 3.50%
11 Johns Hopkins 3,969.0 1.34%
University
12 William Leader 4,000.0 1.35%
TOTAL 20,791.0 297,012.5 100.00%
____________________
1 Assuming exercise of the Warrants
<PAGE>
EXHIBIT B
FIXED RATE NON-NEGOTIABLE INSTALLMENT NOTE
August 1, 1995 $500,000.00
FOR VALUE RECEIVED, Trion, Inc., a Pennsylvania corporation
("Maker"), hereby promises to pay Sunwest Bank of Albuquerque,
N.A. ("Sunwest"), also referred to herein as "Payee") as agent
for the benefit of those persons and entities listed on Schedule
A attached hereto (collectively, the "Stockholders"), the
principal amount of Five Hundred Thousand and no/100 U.S. Dollars
($500,000.00), together with interest thereon calculated from the
date hereof in accordance with the provisions of this promissory
note (this "Note"). This Note is being made by Maker and
deposited with Sunwest in accordance with the terms hereof and
those of that certain Stock Purchase Agreement of even date
herewith between the Maker and the other signatories thereto (the
"Purchase Agreement"). Maker's obligations under this Note are
subject to its right of setoff pursuant to paragraph 4 of this
Note. Capitalized terms that are used but not defined herein
shall have the respective meanings given such terms in the
Purchase Agreement.
1. ACCRUAL OF INTEREST. Interest will accrue from and
after the date hereof on the unpaid principal amount of this Note
outstanding from time to time until the entire unpaid principal
amount hereof is paid in full at an interest rate per annum of
6.00%. Interest shall be computed on the basis of the actual
number of days elapsed over a period of 365 days. Principal and
interest under this Note shall be repayable as follows:
(i) interest shall commence to accrue as of the date hereof
and shall be due and payable quarterly commencing November
1, 1995, and thereafter each February 1, May 1, August 1 and
November 1 during which any unpaid principal amount remains
outstanding hereunder; and
(ii) principal shall not be required to be repaid until
October 1, 1997, at which time all unpaid principal and
interest under this Note (after making appropriate
reductions, if any, for any amounts offset against this Note
in accordance with paragraph 4 of this Note) shall be due
and payable in full.
2. PREPAYMENT. This Note may be prepaid, either in whole
or in part, at any time by the Maker without any penalties or
costs for such prepayment.
3. EVENTS OF DEFAULT.
(a) DEFINITION. For the purposes of this Note, an
Event of Default will be deemed to have occurred if:
(i) Maker fails to pay when due any amount
(whether interest, principal or other amount) then due
and payable on this Note;
(ii) Maker makes an assignment for the benefit of
creditors or admits in writing its inability to pay its
debts generally as they become due; or an order,
judgment or decree is entered adjudicating Maker
bankrupt or insolvent; or any order for relief with
respect to Maker is entered under the Bankruptcy Code
of 1978, as amended (the "Bankruptcy Code"); or Maker
petitions or applies to any tribunal for the
appointment of a custodian, trustee, receiver or
liquidator, or commences any proceeding relating to
itself under any bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt,
dissolution or liquidation law of any jurisdiction; or
any such petition or application is filed, or any such
proceeding is commenced, against Maker and either (A)
Maker by any act indicates its approval thereof,
consents thereto or acquiescences therein or (B) such
petition, application or proceeding is not dismissed
within 60 days.
(b) CONSEQUENCES OF EVENTS OF DEFAULT.
(i) If any Event of Default (other than the type
described in paragraph 3(a)(ii) hereof) has occurred,
the Payee upon the written request of any Stockholders
may demand (by written notice delivered to Maker)
immediate payment of all or any portion of the
outstanding principal amount of this Note, which amount
shall become due and payable upon such demand. If an
Event of Default of the type described in paragraph
3(a)(ii) has occurred, then all of the outstanding
principal amount of this Note shall automatically be
immediately due and payable without any action on the
part of the Payee.
(ii) The Payee will also have any other rights
which Payee may have been afforded under any contract
or agreement at any time and any other rights which
Payee may have pursuant to applicable law arising from
an Event of Default.
4. RIGHT OF SETOFF. The Maker may, in lieu of receiving
payment for any sums owed to Maker by the Stockholders under the
Purchase Agreement on account of any Claims (as defined in
Article IX of the Purchase Agreement), setoff against the
principal balance of this Note all amounts that have been
determined to be payable to it for Claims that it has asserted
under the Purchase Agreement. Notwithstanding anything to the
contrary in this Note, Payee (and all Stockholders to whom Payee
might make payment) shall forfeit any interest on any portion of
the principal balance of this Note that is set off by Maker
pursuant to paragraph 4 of this Note in respect of a Claim
asserted under the Purchase Agreement, which interest accrued
during the period from and after the date the Claim giving rise
to such setoff was asserted under the Purchase Agreement through
and including the date such principal amount is set off pursuant
to this paragraph 4. Any setoff will be accomplished by written
notice delivered to the Payee by the Maker (with a copy of such
notices mailed to the Stockholders at their respective addresses
set forth in the Stock Purchase Agreement) identifying the amount
of principal under this Note being set off. The effective date
of such setoff shall be the date thirty days following the date
of delivery of such notice to Payee. During such thirty day
period, the Stockholders may contest the amount of such setoff by
discussions with Maker; provided no extension of the effective
date of any setoff shall be made without the Maker's written
consent.
5. AMENDMENT AND WAIVER. Except as otherwise expressly
provided herein, the provisions of this Note may be amended only
upon the express prior written consent of the Maker and the
Payee.
6. CANCELLATION. After all obligations for the payment of
money arising under this Note have been paid in full, this Note
will be surrendered to Maker for cancellation.
7. PLACE OF PAYMENT. All payments to be made under this
Note will be made by wire transfer of immediately available funds
to the account specified in Annex I to this Note or to such other
account and in such other mutually agreeable manner as the Payee
may designate in writing to the Maker from time to time; PROVIDED
that so long as this Note remains held by Sunwest as agent and
for the benefit of the Stockholders, payments to Sunwest shall be
deemed to satisfy all payments due under this Note to the
Stockholders.
8. COSTS OF ENFORCEMENT. Maker agrees to promptly
reimburse the holder of this Note for all costs and expenses,
including without limitation, reasonable attorney's fees,
incurred or arising in connection with the enforcement by the
holder of its rights under this Note; PROVIDED, however, Maker
shall not be responsible for the reimbursement of any costs of
expenses incurred or arising in connection with the collection or
enforcement of rights relating to any amounts setoff by the Maker
under paragraph 4 of this Note.
9. WAIVER OF PRESENTMENT, DEMAND AND DISHONOR.
(a) Maker hereby waives presentment for payment,
protest, demand, notice of protest, notice of nonpayment and
diligence with respect to this Note.
(b) No failure on the part of Payee to exercise any
right or remedy hereunder with respect to Maker, whether before
or after the happening of an Event of Default, shall constitute
waiver of any such Event of Default or of any other Event of
Default by such holder or on behalf of any other holder. No
failure to accelerate the debt of Maker evidenced hereby by
reason of an Event of Default or indulgence granted from time to
time shall be construed to be a waiver of the right to insist
upon prompt payment thereafter; or shall be deemed to be a
novation of this Note or a reinstatement of such debt evidenced
hereby or a waiver of such right of acceleration or any other
right, or be construed so as to preclude the exercise of any
right any holder of this Note may have, whether by the laws of
the state governing this Note, by agreement or otherwise; and
Maker hereby expressly waives the benefit of any statute or rule
of law or equity (other than as would affect any amounts setoff
pursuant to paragraph 4 hereof) that would produce a result
contrary to or in conflict with the foregoing.
10. USURY. Maker and the Payee intend that the obligations
evidenced by this Note conform strictly to the applicable usury
laws from time to time in force. All agreements between Maker
and the holder of this Note, whether now existing or hereafter
arising and whether oral or written, hereby are expressly limited
so that in no contingency or event whatsoever, whether by
acceleration of maturity hereof or otherwise, shall the amount
paid or agreed to be paid to such holder, or collected by such
holder, by or on behalf of Maker for the use, forbearance or
detention of the money to be loaned to Maker hereunder or
otherwise, or for the payment or performance of any covenant or
obligation contained herein of Maker to such holder, or in any
other document evidencing, securing or pertaining to such
indebtedness evidenced hereby, exceed the maximum amount
permissible under applicable usury law. If under any
circumstances whatsoever fulfillment of any provision thereof or
any other document, at the time performance of such provisions
shall be due, shall involve transcending the limit of validity
prescribed by law, then, IPSO FACTO, the obligation to be
fulfilled shall be reduced to the limit of such validity; and if
under any circumstances any holder of this Note ever shall
receive from or on behalf of Maker an amount deemed interest, by
applicable law, which would exceed the highest lawful rate, such
amount that would be excessive interest under applicable usury
laws shall be applied to the reduction of Maker's principal
amount owing hereunder and not to the payment of interest, or if
such excessive interest exceeds the unpaid balance of principal
and such other indebtedness, the excess shall be deemed to have
been a payment made by mistake and shall be refunded to Maker or
to any other person making such payment on Maker's behalf.
11. GOVERNING LAW. The validity, construction and
interpretation of this Note will be governed by and construed in
accordance with the domestic laws of the State of North Carolina,
without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of North Carolina or any
other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of North Carolina.
12. ASSIGNMENT. This Note and the rights to payment
hereunder or proceeds hereof shall not be assignable without the
express prior written consent of the Maker.
13. ADDITIONAL DUTIES. Sunwest agrees to also be bound by
and perform in accordance with the items set forth on Exhibit II
hereto.
14. ASSURANCES FOR PAYEE. Each of the Maker, and by their
acceptance of this Note, the Stockholders, agrees to execute such
reasonable indemnification or release agreements with the Payee
as the Payee may require in order to serve in its capacity
hereunder for the Stockholders.
IN WITNESS WHEREOF, Maker has executed and delivered this
Note on the date first above written.
TRION, INC.
By:________________________________
Its:_______________________________
<PAGE>
ANNEX I
[WIRE INSTRUCTIONS FOR PAYMENT]
<PAGE>
EXHIBIT III
ADDITIONAL DUTIES OF SUNWEST
In addition to the matters set forth in the Purchase
Agreement and the foregoing Note, Sunwest further agrees as
follows:
1. Within two business days of receipt by it of any amount
paid hereunder, to distribute such payment, pro rata,
to the Stockholders in accordance with the Stockholders
respective percentage interest set forth on Schedule A.
<PAGE>
SCHEDULE A TO NOTE
COMMON STOCK
STOCKHOLDER ADDRESS
Allied Investment 1666 K St., NW, Suite 901
Corporation I and II Washington, DC 20006
David M. Schlegel 11212 Woodmar Lane NE
Albuquerque, NM 87111
Elmer A. Erickson P. O. Box 2502
Corrales, NM 87048
Richard H. Marmon 1106 Madison NE
Albuquerque, NM 87110
Estate of Robert S. 7305 Santa Fe Trail NW
Suchomski Albuquerque, NM 87120
Arthur D. Cline 1909 Maplewood Cir.
Hagerstown, MD 21740
John P. Cummings P. O. Box 1813
Corrales, NM 87048
Jimmy E. Roybal 8926 Boe Lane NE
Albuquerque, NM 87114
Richard Dempster 900 Royal Birkdale Dr.
Tarpon Springs, FL 34689
John Leahy 30 East Padonia Rd.
Suite 505
Timonium, MD 21093
William Leader 12208 Manitoba NE
Albuquerque, NM 87109
Johns Hopkins University Edwin T. Yates, Ph.D.
Patent Management Office
300 Whitehead Hall
Baltimore, MD 21218-2692
TOTALS<PAGE>
NO. OF % INTEREST IN
STOCKHOLDER SHARES PROCEEDS OF
NOTE
Allied Investment 69,862.5 23.52%
Corporation I and II (assuming
exercise
of the
Warrants)
David M. Schlegel 81,690.0 27.50%
Elmer A. Erickson 29,175.0 9.82%
Richard H. Marmon 29,175.0 9.82%
Estate of Robert S. 14,587.5 4.91%
Suchomski
Arthur D. Cline 14,587.5 4.91%
John P. Cummings 14,587.5 4.91%
Jimmy E. Roybal 14,587.5 4.91%
Richard Dempster 10,395.5 3.50%
John Leahy 10,395.5 3.50%
William Leader 4,000.0 1.35%
Johns Hopkins University 3,969.0 1.34%
TOTALS 100.00%
<PAGE>
EXHIBIT C
REPRESENTATION LETTER
_______________, 1995
(Closing Date)
TO THE STOCKHOLDERS OF
ENVIRCO CORPORATION
6701 Jefferson NE
Albuquerque, NM 87109
Re: Acquisition by Trion, Inc.
Gentlemen:
This letter is delivered to you in connection with the
acquisition of the Shares of the Company by Trion, Inc. pursuant
to that certain Stock Purchase Agreement dated _____________,
1995, among Envirco Corporation, Trion, Inc., Allied Investment
Corporation, Allied Investment Corporation II, Richard Dempster,
John Leahy, William Leader, and the Current Stockholders of
Envirco Corporation. This letter confirms that the representa-
tions and warranties made by Trion in SECTION 5.4 of the Stock
Purchase Agreement are true and correct as of the date of this
letter. Trion understands that you are relying on the repre-
sentations made in SECTION 5.4 and herein, and that you have not
and will not conduct any investigation of the factual
representations made therein and herein.
TRION, INC.
______________________________
By____________________________
Its______________________
<PAGE>
EXHIBIT D
MAXIMUM INDEMNIFICATION WHICH CAN BE RECOVERED
FROM ENVIRCO CORPORATION STOCKHOLDERS
MAXIMUM
PRO RATA PRO RATA
FINAL INDEMNIF- INDEMNIFICATION
SHAREHOLDERS SHARES ICATION AMOUNT
1 David M. Schlegel 81,690.0 27.50% $ 825,100
2 Allied Investment
Corporation I and II 69,862.5 1 23.52% $ 705,600
3 Elmer A. Erickson 29,175.0 9.82% $ 294,700
4 Richard H. Marmon 29,175.0 9.82% $ 294,700
5 Estate of Robert S.
Suchomski 14,587.5 4.91% $ 147,350
6 Arthur D. Cline 14,587.5 4.91% $ 147,350
7 John P. Cummings 14,587.5 4.91% $ 147,350
8 Jimmy E. Roybal 14,587.5 4.91% $ 147,350
9 Richard Dempster 10,395.5 3.50% $ 105,000
10 John Leahy 10,395.5 3.50% $ 105,000
11 Johns Hopkins
University 3,969.0 1.34% $ 40,100
12 WILLIAM LEADER 4,000.0 1.35% $ 40,400
TOTAL 297,012.5 100.00% $ 3,000,000
Note $ 500,000
Plus Additional Indemnification $ 2,500,000
Maximum Total Indemnification
Obligation of Stockholders $ 3,000,000
1 Assuming exercise of the Warrants
<PAGE>
EXHIBIT E
ADDRESSES OF STOCKHOLDERS
1. David M. Schlegel
11412 Woodmar Lane NE
Albuquerque, NM 87111
505-292-6223
505-345-8875 (Fax)
2. Allied Investment Corporation
and Allied Investment
Corporation II
Will Dunbar
1666 K Street, NW, Suite 901
Washington, DC 20006
202-331-1112
202-659-2053 (Fax)
3. Elmer A. Erickson
PO Box 2502
Corrales, NM 87048
505-898-8749
505-345-8875 (Fax)
4. Richard H. Marmon
1106 Madison NE
Albuquerque, NM 87110
505-262-1083
505-345-8875 (Fax)
5. Judith M. Suchomski,
Personal Representative
of the Estate of
Robert S. Suchomski
7305 Santa Fe Trail NW
Albuquerque, NM 87120
505-897-7290
6. Arthur D. Cline
1909 Maplewood Cir.
Hagerstown, MD 21740
301-791-2785
301-714-7483 (Fax)
7. John P. Cummings
PO Box 1813
Corrales, NM 87048
505-898-6743
505-345-8875 (Fax)
8. Jimmy E. Roybal
8926 Boe Lane NE
Albuquerque, NM 87114
505-898-7274
505-345-8875 (Fax)
9. Richard V. Dempster **
900 Royal Birkdale Drive
Tarpon Springs, FL 34689
813-937-7660
813-942-8096 (Fax)
10. John I. Leahy
Maryland Consulting Group
30 East Padonia Rd., Suite 505
Timonium, MD 21093
410-252-9080
410-561-8195 (Fax)
11. William J. Leader
12208 Manitoba NE
Albuquerque, NM 87109
505-294-4791
505-345-8875 (Fax)
12. Johns Hopkins University
Edwin T. Yates, Ph.D.
Patent Management Office
300 Whitehead Hall
Baltimore, MD 21218-2692
410-516-8137
410-516-7811 (Fax)
____________________
**CC: Richard V. Dempster
10 South Bald Wynd
Bald Head Island, NC 28461
910-457-5171
910-457-5184 (Fax)
<PAGE>
The following schedules included as a part of the
Disclosure Schedule to the Agreement have been omitted. The
Registrant will furnish supplementally a copy of such schedules
to the Securities and Exchange Commission upon request.
Exhibit 1 Employment Agreement with David M. Schlegel
Exhibit 2 Employment Agreement with Richard H. Marmon
Exhibit 3 Employment Agreement with Patrick Cameron
Exhibit 4 Employment Agreement with Arthur D. Cline
Exhibit 5 Stock Option, Employment Continuation and
Non-Competition Agreement with Elmer A.
Erickson
Section 1.3(a)Calculation of Working Capital
Section 1.3(b)Funded Indebtedness
Section 1.3(c)Current Liabilities
Section 4.1 Ownership of Shares
Section 4.2 Officers and Directors
Section 4.4 Consents and Approvals
Section 4.5 Litigation
Section 4.6 Contracts and Other Agreements
Section 4.7 Customers and Suppliers
Section 4.8 Exceptions to Good and Marketable Title
Section 4.9 Bank Accounts
Section 4.10 Patents, Trademarks and Tradenames
Section 4.11 Employment Benefit Plans; ERISA
Section 4.12 Tax Matters
Section 4.13 Insurance
Section 4.16 Title to Real Estate
Section 4.17 Undisclosed Liabilities
Section 4.18 Insider Interests
Section 4.20 Absence of Certain Changes
Section 4.22 Receivables and Inventory
Section 4.23 Personnel
Section 4.25 Environmental Matters
Section 4.26 Assets Necessary to Business; Licenses and
Permits
Section 4.27 Affiliate Agreements; Potential Conflicts of
Interest
Section 4.28 Subsidiaries and Investments
EXHIBIT 99.1
For more information contact:
C. J. Monsma (919) 775-2201
FOR IMMEDIATE RELEASE
TRION, INC. ACQUIRES
ENVIRCO CORPORATION
Sanford, NC, August 1, 1995 -- TRION, INC. (NASDAQ: TRON)
Trion, Inc. has acquired all of the outstanding stock of Envirco Corporation
for $8 million. Envirco, headquartered in Albuquerque, New Mexico with
revenues of $12 million in its latest fiscal year, manufactures HEPA filters,
clean rooms and workstations for microelectronics manufacturers,
pharmaceutical companies, hospitals and others requiring ultra-clean
environments for critical technologies. The acquisition, which was completed
August 1, 1995, is a part of Trion's strategic plan to complement its internal
growth with acquisitions that expand its technology-based air cleaning and
high efficiency air filtration business.
Steven L. Schneider, President and CEO of Trion, Inc., stated "The strategic
fit between Trion and Envirco is exceptional and the growth potential for both
companies is substantial. Trion's strength in serving the traditional
manufacturing and commercial markets is an excellent match with Envirco's
strength in the high technology, semi-conductor, pharmaceutical and medical
markets. This acquisition builds on our strengths in technology,
manufacturing and worldwide marketing and expands our markets. We believe it
will enhance our growth and improve earnings per share with a low level of
risk."
Furthermore, Schneider stated that "Wachovia Bank of North Carolina agreed to
provide Trion an $18 million unsecured credit facility." He indicated Trion
would use internally generated funds and a portion of this facility for the
Envirco acquisition.
(more)<PAGE>
Page 2
August 1, 1995
Trion, Inc.
Trion does not expect to make any operational changes and Envirco management
will remain in their current positions. Envirco President and CEO, David
Schlegel, stated "Our new relationship with Trion will enable us to grow and
expand more quickly from our already successful base."
Trion specializes in the design, manufacture and sale of high performance air
cleaning products for industrial, commercial, residential and consumer markets
throughout the world.
###
